Liquidity Risk Services
Liquidity risk is the current or prospective risk that a financial institution, though solvent, either does not have sufficient financial resources available to meet its liabilities when they fall due, or can secure them only at excessive cost. Liquidity risk arises from the inability to manage unplanned decreases or changes in funding sources.
Whilst the Basel Accord does not require a capital charge to be calculated in Pillar 1 in respect of liquidity risk, asset and liability management remains one of the key roles undertaken within risk management, and liquidity risk one of the key risks which concern a board.
The funding liquidity risk limit is typically quantified by calculating liquidity ratios, including the number of days currently covered by expected cash flow. In this work there is a need to include all of the uncertainties that are associated with the banking induustry and inpact upon the institution’s liquidity.
Risk Reward can assist a firm through assisting in the design of an appropriate organisational framework suitable for the effective management and control of liquidity risk and able to meet the expected future demands of the business. We can assess a firm’s implemented framework against industry best practice and undertake a gap analysis.
Our services include, but are not limited to, the following:
- Reviewing structure role and responsibilities
- Reviewing objectives and mission consistency
- Reviewing he adequacy of data reporting
- Reviewing liquidity strategies and approaches
- Confirming the adequacy of models to deal with business uncertainty
- Assisting in the design and implementation of stress testing and scenario modeling
- Reviewing the adequacy of the control and risk management processes associated with liquidity risk
- Undertaking a review of suitable cost efficient software solutions to meet the current and future demands of the business
Risk Reward has consultants that are experienced with systems in all key areas of risk management including operational, credit, market and liquidity risks and are able to provide these skills to supplement the knowledge of your core teams to ensure a successful risk management systems implementation.
For more information please contact Dennis Cox.
