Liquidity Horizon Risk

Liquidity Horizon Risk refers to the potential difficulty an organization may face when trying to convert assets into cash over a specific time frame, especially during financial stress. It considers how quickly and at what cost assets can be sold or liabilities settled, depending on market conditions. In liquidity risk management, understanding this risk is crucial, as it helps firms prepare for situations where they need immediate access to cash without losing significant value on their assets. Properly managing liquidity horizon risk ensures that an organization can meet its financial obligations when they arise.