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Making strides in financial services risk management - Liquidity risk - EY - Global

Making strides in financial services risk management

Liquidity risk

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“We are much more focused on liquidity management. It is evolutionary.” – Survey respondent

Citing liquidity management as the single largest lesson learned from the crisis, respondents overwhelmingly reported making post-crisis changes to managing and controlling liquidity risk.

The changes ranged from fundamental strategic shifts in philosophy and governance to more tactical efforts to refine specific practices. Virtually all banks have increased the buffer of liquid assets for risk management purposes, building their cash reserves to comply with and even exceed regulatory requirements.

Changes to managing liquidity risk

Additionally, instituting a more rigorous charging structure both internally and externally is having a real impact on the business. More than 80% of respondents have introduced a more rigorous internal pricing structure while 69% have made changes to counterparty/customer charges for liquidity.

Primary impediments to changes include poor data quality, inconsistent information, and the sheer volume of information, all of which make it difficult to deliver necessary information.

Challenges to liquidity management

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