The different types of liquidity risk every bank must manage #Liquidity #Banking #Finance #Risk
6 April 2026·1 min
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Welcome to Liquidity Day 3 from the Industry Portal liquidity management course.
In this session, we move beyond history and focus on the nature of liquidity risk itself. We break down the key types of liquidity risk that banks face, showing how they emerge, interact, and escalate during periods of stress.
You will gain a practical understanding of funding liquidity risk and market liquidity risk, including how maturity mismatches arise and why banks borrow short and lend long. We explain how confidence shocks or market disruptions can quickly turn a stable position into a full liquidity crisis.
The session also covers critical but often overlooked risks, including contingent liquidity risk from off balance sheet exposures, and intraday liquidity risk, where timing of payments and settlement flows becomes crucial. We explore structural liquidity risk and how funding concentration, currency mismatches, and reliance on short term markets can create hidden vulnerabilities over time.
You will learn how banks identify, measure, and manage liquidity risk in practice using tools such as cash flow forecasting, maturity ladders, liquidity buffers, asset liquidity assessments, and stress testing. We also cover governance, including the role of Treasury, Risk, ALCO, and senior management in overseeing liquidity across different time horizons.
Regulatory frameworks are embedded throughout, including how these risks link to Basel III metrics such as the Liquidity Coverage Ratio and Net Stable Funding Ratio, as well as internal processes like ILAAP.
This session builds a critical foundation for understanding how liquidity risk is managed day to day and how it shapes strategic decision making within banks.
Subscribe to Industry Portal for the full liquidity management series.
#IndustryPortal #LiquidityManagement #Banking #Finance #Treasury #RiskManagement #BaselIII #LCR #NSFR
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