Effective management of liquidity risk is more critical now than ever before. The consequences of failure are not simply lower profits: they are far-reaching and highly destructive. Firms are under increasing pressure to identify early warning signs and make the dramatic improvements necessary to manage liquidity risk better. The challenge facing banks and other financial organisations is to boost their efficiency, achieve better controls and satisfy the regulators – without the need for a complex data warehouse project
The UK Financial Services Authority (FSA) estimates that the one-off costs for UK firms to meet the new liquidity reporting requirements are likely to run into billions of pounds. Leading firms see this as an opportunity to overhaul their risk management capabilities and bring their middle- and back-office liquidity management systems in line with their intra-day front-office risk management processes.
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