Liquidity Risk Management

Liquidity risk refers to the risk of incurring losses when it becomes difficult to secure the requisite funds or when procuring funds at a much higher than normal interest rate becomes necessary due to a mismatch between the timing of use and procurement  or to an unexpected outflow of funds, or to risks incurred when transactions cannot be  conducted or must be conducted at prices that are much more disadvantageous than normal due to market disruptions or other factors (hereafter, “market liquidity risk”).

Banks establish a framework, system, and procedures in accordance with its liquidity risk management standards. Market liquidity risk is a risk that accompanies market operations and Banks manage these risks comprehensively within the market risk management limits.