Financial Products & Associated Risk Management

Liquidity Risk Management


This eCourse consists of three modules on liquidity risk management. Module 1 examines why liquidity issues such as those experienced during the crisis can arise, and how both regulators and banks have changed their approach to assessing and managing liquidity risk since the crisis. The tutorial also introduces the concept of ALM and outlines how liquidity risk is managed as part of a bank’s overall ALM strategy.

Module 2 focuses on some of the strategies that banks use to minimize liquidity risk and ensure they have adequate sources of funding in stress situations.

Module 3 describes many of the tools and techniques that are used to assess, measure, and monitor liquidity risk, including liquidity gap analysis, cash flow forecasting, and ratios such as the loan/deposit ratio, Liquidity Coverage Ratio (LCR), and Net Stable Funding Ratio (NSFR).


On completion of this course, you will be able to:
- Recognize the reasons why the nature of the banking business means that banks are particularly exposed to liquidity risk
- Identify the problems with liquidity risk management that were exposed by the global financial crisis and the regulatory response to this
- Recognize the relationship between asset-liability management and liquidity risk
- Identify the key components of the liquidity risk management framework
- Identify the tools and techniques used to identify and address likely or potential funding needs and liquidity shortfalls
- Recognize the role of liquidity buffers and contingency funding plans (CFPs) should unexpected events occur
- Recognize the role of liquidity gap analysis and cash flow forecasting in assessing liquidity risk
- Identify the various ratios that banks use to measure liquidity risk


Module 1: Liquidity Risk - An Introduction
Topic 1: Overview of Liquidity Risk
Topic 2: ALM & Liquidity Risk
Topic 3: Risk Management Framework for Liquidity Risk

Module 2: Liquidity Risk - Management
Topic 1: Managing Liquidity Risk
Topic 2: Funding & Liquidity Management

Module 3: Liquidity Risk – Measurement
Topic 1: Gap Analysis & Cash Flow Forecasting
Topic 2: Liquidity Ratios
Topic 3: Other Tools & Techniques


Relevant Subject
SFC:2.50, PWMA:2.50
Non-Member: HK$1115
Staff of Corporate Member: HK$765
All Member: HK$765