Risk Management in Finance

5.

5.1.

Types of Liquidity Risk

5.1.1.

Funding Liquidity Risk

5.1.1.1.

Inability to Meet Obligations

5.1.1.2.

Funding Mismatches

5.1.1.3.

5.1.2.

Market Liquidity Risk

5.1.2.1.

Inability to Sell Assets Quickly

5.1.2.2.

Price Impact of Liquidation

5.1.2.3.

Bid-Ask Spreads

5.1.3.

Contingent Liquidity Risk

5.1.3.1.

Off-Balance Sheet Commitments

5.1.3.2.

Contingent Claims

5.2.

Measuring Liquidity Risk

5.2.1.

Liquidity Ratios

5.2.1.1.

5.2.1.2.

5.2.1.3.

Liquidity Coverage Ratio (LCR)

5.2.1.4.

5.2.2.

Liquidity Gap Analysis

5.2.2.1.

Maturity Mismatch Analysis

5.2.2.2.

Cash Flow Projections

5.2.2.3.

Behavioral Assumptions

5.2.3.

Net Stable Funding Ratio (NSFR)

5.2.4.

Market-Based Indicators

5.2.4.1.

5.2.4.2.

5.2.4.3.

5.2.4.4.

Price Impact Measures

5.2.5.

5.2.5.1.

Liquidity Stress Scenarios

5.2.5.2.

Survival Horizons

5.3.

Managing Liquidity Risk

5.3.1.

Cash Flow Forecasting

5.3.1.1.

Short-Term Forecasting

5.3.1.2.

Long-Term Forecasting

5.3.1.3.

Scenario-Based Forecasting

5.3.2.

Maintaining Liquid Asset Buffers

5.3.2.1.

High-Quality Liquid Assets (HQLA)

5.3.2.2.

Liquidity Buffer Sizing

5.3.3.

Diversifying Funding Sources

5.3.3.1.

5.3.3.2.

Capital Markets

5.3.3.3.

5.3.3.4.

Retail vs. Wholesale Funding

5.3.4.

Contingency Funding Plan (CFP)

5.3.4.1.

Plan Development

5.3.4.2.

Stress Testing CFP

5.3.4.3.

Early Warning Indicators

5.3.5.

Access to Central Bank Facilities

5.3.5.1.

Discount Window Lending

5.3.5.2.

Emergency Liquidity Assistance

5.3.5.3.

Collateral Requirements

5.3.6.

Liquidity Transfer Pricing

5.3.6.1.

Internal Funding Costs

5.3.6.2.

Liquidity Premiums

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6. Operational Risk