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Nov 27, 2014 · Once the retirement phase has begun, the liquidity risk is equivalent to the pension payments due to the retiree. A pension fund—particularly a fund with many plan members—must consider the ...
- Jonathan Jacob
However, with a significant drop in equity returns (say -15%), the potential funding requirements may hit the boundaries of the plan’s risk appetite. That is, a 15% drop in equities is the risk limit upon which the maximum equity investment was based. Risk limits are a risk management tool to help characterize the plan’s risk tolerance ...
During your retirement, the risk related to liquidity is closely linked to your retirement savings withdrawal strategy. That risk becomes particularly relevant if you are counting on an illiquid asset, such as your house, to plan your retirement income or if you outlive your personal savings.
- What Is Liquidity Risk?
- Causes of Liquidity Risk
- Types of Liquidity Risk
Liquidity risk refers to the risk of not being able to buy or sell an asset quickly enough to prevent a loss or to meet financial obligations. This type of risk arises when there is a lack of marketability or when there is a sudden shift in market conditions, resulting in the inability to find a buyer or seller at a fair price. Liquidity risk can a...
Market Disruptions
Sudden shocks or events that impair market functioning can result in heightened liquidity risk. These disruptions can be caused by natural disasters, geopolitical events, or financial crises. They can lead to a rapid reduction in market liquidity, making it difficult for financial institutions to buy or sell assets to meet their obligations.
Market Liquidity Risk
Market liquidity risk arises when an organization is unable to execute transactionsat the desired price due to market conditions. It can occur due to various factors, such as low trading volume, market impact, and transaction costs.
The revised LAR guideline reflects two key revisions on intraday liquidity and the treatment of Bankers' Acceptances (BAs). Intraday liquidity revisions affect chapters 1 and 7 of the LAR guideline. Revisions to the treatment of BAs affect chapters 3 and 4. We did not make any changes to chapters 2, 5, or 6.
Liquidity Principles - Guideline impact analysis statement (2019) Changes to the Guideline B-6 – Liquidity Principles. This Guideline sets out prudential considerations relating to the liquidity risk management programs of federally regulated deposit-taking institutions and bank holding companies. In this Guideline, the term "institution ...
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Liquidity risk is among the most important risks that pension funds need to manage . This is the risk that pension funds will not be able to meet their cash and collateral obligations. If liquidity needs are not well provisioned for , then adverse scenarios could force funds to sell less-liquid
