Defining liquidity risk

blood-vessels

If liquidity is the lifeblood of a financial organisation, operational risk management ought to have a critical role in keeping the circulation going. The slightest gap or blockage to the flow could have catastrophic consequences. Practically speaking, however, firms and regulators are only just beginning to allocate sufficient time, thought and resources to mitigate the liquidity threat. Liquidity fears were paid short shrift by banks and regulators before the liquidity crisis that arrested