By Shannon Harris, Senior Research Executive, CeFPro.
Liquidity risk management continues to be a vitally important area to ensure the stability of the financial industry. The financial crisis highlighted how poor liquidity risk practices can quickly lead to the downfall of institutions and have a systemic impact across the industry. Since then, increased regulatory requirements and improved practices have contributed to many institutions strengthening their liquidity risk function, and the drive to enhance liquidity risk management continues as we are seeing more time and resources being dedicated.
Since the events of the crisis the financial landscape has dramatically changed in the past ten years. We are now experiencing new challenges in the form of markets, technology and regulatory demand. It is the task of many industry professionals to stay ahead of the curve and effectively monitor new risks. Being informed and adaptable in this current environment is key to success. Additionally many professionals and firms actively seek guidance from the industry to identify the top opportunities and challenges facing liquidity risk.
To explore this further The Center for Financial Professionals conducted extensive research with multiple industry professionals. The aim of this primary research was to identify the main topics and themes being address by liquidity professionals over the coming six to twelve months. The results from this analysis provided a rare glimpse into multiple institutions and their thoughts and concerns. Just some of the main topics produced from research have been highlighted below;
As always regulation continues to be a top area of debate and discussion. Research suggested that many are concerned with uncertainty around regulation and the ability to keep up with demand. Many commented on how since the financial crisis regulatory obligations have increased, and it is unsure at this stage which regulations are going to be in focus for 2019/2020. So how are FIs expected to manage current requirements, whilst preparing for upcoming regulatory regimes? This is reflected in some of the comments below;
“The regulators are constantly fine tuning and improving current regulation. So you need to keep up to speed, whilst making sure you are ready for the next big requirement.”