Liquidity Stress Testing 💧 Can banks survive a crisis? #Banking #Liquidity #riskmanagement
10 April 2026·1 min
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How do banks know they can survive a financial crisis?
In this Industry Portal video, we break down liquidity modelling and stress testing — the core tools banks use to assess whether they can withstand extreme scenarios such as market crashes, deposit outflows, and funding shocks.
You will learn how banks forecast cash inflows and outflows, simulate severe but realistic stress scenarios, and evaluate whether they can continue meeting their obligations under pressure. This process sits at the heart of modern liquidity risk management and financial stability.
We explain how liquidity stress testing works in practice, including the difference between idiosyncratic stress and market wide stress, how survival horizons are calculated, and how banks identify funding gaps. You will also understand why behavioural assumptions and data quality are critical in producing reliable outcomes.
The video connects these concepts to key regulatory frameworks such as the Liquidity Coverage Ratio and internal processes like ILAAP, introduced following the Global Financial Crisis to strengthen resilience across the banking system.
You will also see how regulators use stress testing to challenge banks and prevent failures before they happen, making liquidity modelling one of the most important defences against bank runs and systemic risk.
By the end of this video, you will be able to answer a critical question: if a bank lost access to funding tomorrow, how long could it survive?
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#LiquidityRisk #StressTesting #Banking #Finance #Treasury #RiskManagement #LCR #ILAAP #FinancialCrisis #theindustryportal
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