Liquidity Risk Essay Example | Topics and Well Written Essays - 4000 words

Liquidity find - Essay ExampleOn the opposite side, the market liquidity depends on the calculation of value seek and the length of holding period. So, the jeopardize liability is attached with the issue of funding liquidity which may variegate in the case of vast range of transaction (Fight, 421). The risk of liquidity tends to be managed, when market, credit and other risks are considered to be additional. There are several types of risk resolving techniques. These all are combine with the life of initial bank risk. The Federal Reserve System provided a banking risk framework intentional by six factors. These include, reputational and liquidity risk, legal risks, market risks, credit risks. The structures of risk management are therefore reviewed, making use of these risk categories. The supervision group is concerned with the liquidity risk fund, continue the healthful action against the other emerging risk and follow the current risk. All this preventive actions are lai d on revelation by majority of Federal Reserve banks. This process tends to figure on a continuous basis, and as a result, measures to counter the existence of so many opportunities may result to risk (Morrison, 245). The financial risk is related with the possibilities of losing money of shareholder. On the other word, the investors did not have enough gift on their investment in the company. This type of situation arises when the cash flow of the company proves inadequate to find out all the financial obligation of the company. At the time of insolvency, the creditors.