What is the primary purpose of the narratives disclosed according to IFRS 7?

The primary purpose of the narratives disclosed according to IFRS 7 is to help users understand management's attitude to risk. IFRS 7 focuses on the disclosures related to financial instruments and emphasizes the importance of understanding the risks associated with these instruments. The narratives provided are intended to enhance transparency and allow users to assess not only the financial position of the entity but also how management perceives and manages those risks.

This disclosure includes information about the nature and extent of risk arising from financial instruments, and how these risks are managed. By understanding management’s attitude towards risk, users can make informed decisions regarding the financial health and risk profile of the entity. This insight into risk management practices is crucial for stakeholders, such as investors and creditors, who rely on this information for their assessments.

While the other options may contain elements that are present in the financial reporting environment, they do not encapsulate the primary focus of IFRS 7 disclosures, which is specifically centered around risk management and the associated attitudes of management toward those risks.