Liquidity Day 7 💧 ILAAP explained simply. #Banking #Liquidity #risk
26 April 2026·1 min
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Welcome to Day 7 of the Industry Portal liquidity management course, where we explore the Internal Liquidity Adequacy Assessment Process (ILAAP) — the qualitative core of liquidity risk management.
In this session, we move beyond regulatory ratios to understand how banks demonstrate that they can manage liquidity risk in a credible, sustainable way. ILAAP is not just a report — it is a complete framework that brings together governance, strategy, risk appetite, and decision making.
You will learn how ILAAP fits within the Basel Pillar 2 framework and how it is assessed by supervisors such as the Prudential Regulation Authority and the European Central Bank through the Supervisory Review and Evaluation Process (SREP).
We break down the key components of a strong ILAAP, including Board approved liquidity risk appetite, robust governance across the three lines of defence, and integrated processes for identifying, measuring, and managing liquidity risk.
A major focus is liquidity stress testing and how it feeds into decision making. You will understand how banks design stress scenarios, document assumptions, and use outputs to determine buffer levels, funding strategy, and contingency actions.
The session also covers contingency funding planning, escalation frameworks, and how banks ensure operational readiness through testing and simulation exercises.
For international banks, we explore how ILAAP addresses group and entity level liquidity, ring fencing, and intragroup dependencies, ensuring resilience across jurisdictions.
By the end of this session, you will understand why ILAAP is central to regulatory credibility and how it connects liquidity metrics with real world judgement, governance, and strategy.
👉 Learn more at theindustryportal.com
Subscribe for the full liquidity management course.
#ILAAP #LiquidityManagement #Banking #Finance #Treasury #RiskManagement #SREP #BaselIII #TheIndustryPortal
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