Liquidity Risk Management After the Crisis: More Important Than Ever

Date: January 22, 2011
Pages: 30
Price:
US$ 3,995.00
Publisher: Ovum
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: L07869AE9EEEN
Leaflet:

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Liquidity Risk Management After the Crisis: More Important Than Ever
Introduction

This report looks at the market for Liquidity Risk Management technology against a backdrop of increasing demand for this capability in the wake of the global financial crisis.

Features and benefits
  • Identifies the key vendors and outlines the approaches to achieving appropriate LRM.
Highlights

Banks are obliged to take a critical look at their risk management systems to see what they already have in place and what else they will need to implement to meet these regulatory requirements, and beyond that to use an LRM infrastructure to run their businesses better.

Your key questions answered
  • What are the key trends in the industry?
  • What are banks looking to achieve with LRM technology and what are the options open to them?
SUMMARY

Catalyst
Ovum view
Key messages
  Banks' liquidity management platforms failed in the crisis
  Liquidity risk derives from credit, market, or operational events
  Liquidity risk has broader requirements than ALM
  Funds transfer pricing is becoming a requirement for liquidity risk
  LRM is unlikely to be a rip-and-replace exercise so integration is key
  Vendors should adopt a consultative approach to LRM

MARKET CONTEXT: LIQUIDITY RISK IS TOP OF MIND

The liquidity crisis
Banks' liquidity management platforms failed in the crisis

BUSINESS FOCUS: LIQUIDITY IS ON THE REGULATORY AGENDA

The Liquidity Coverage Ratio addresses short-term funding
  High-quality liquid assets
  Run-off rates
The NSFR addresses medium and long-term funding
Liquidity risk derives from credit, market, or operational events
  Internal sources
  External sources

TECHNOLOGY FOCUS: LIQUIDITY MANAGEMENT GOES BEYOND ALM

Liquidity risk has broader requirements than ALM
  Stress testing
  Contingency planning
  Collateral management
  Diversification/limits management
  Funds transfer pricing
FTP is becoming a requirement for liquidity risk
  [Missing title]

RECOMMENDATIONS

Recommendations for enterprises
  Watch what the UK is doing and liaise with your own regulators
  Prioritize the formulation of an LRM philosophy over technology choices
  Once the philosophy has been established, audit what you have in place
  Consider ways of turbo-charging existing infrastructure
Recommendations for vendors
  LRM is unlikely to be a rip-and-replace exercise, so integration is key
  Adopt a consultative approach to LRM
  Follow Basel III and partner for localization
Alternative views

APPENDIX

Further reading
Methodology
Author
Ovum Consulting
Disclaimer
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