Liquidity Risk Review

Effective risk control requires conducting periodic independent reviews of the risk management process and validation of the risk measurement systems to ensure their integrity, accuracy, and reasonableness.

Liquidity risk, or the risk that financial institutions may be unable to meet certain short-term obligations, is increasingly the topic of internal governance and regulatory concern. Ensure your institution is prepared for future cash flow and compliant with regulatory guidance with a liquidity risk review from Young & Associates.

To meet the requirements of the Joint Policy Statement on Interest Rate Risk (IRR), as well as the Interagency Guidance on Funding and Liquidity Risk Management and the subsequent regulatory guidance, Young & Associates can assist you in assessing the following:

  • The adequacy of the bank’s internal control system
  • Personnel’s compliance with the bank’s internal control system
  • The appropriateness of the bank’s risk measurement system
  • The accuracy and completeness of the data inputs
  • The reasonableness and validity of scenarios used in the risk measurement system
  • The reasonableness and validity of assumptions
  • The validity of the risk measurement calculations within the risk measurement system, including back-testing of the actual results versus forecasted results and an analysis of various variance sources

Our detailed liquidity risk review reports assess each of the above, describe the findings, provide suggestions for any corrective actions, and include recommendations for improving the quality of the bank’s risk management systems and their compliance with the regulatory guidance. We can also customize the review scope to suit your bank’s specific needs. Contact us to speak with one of our experience Liquidity Risk consultants.