Liquidity Risk Management

Liquidity risk management involves ensuring that an organization has enough cash or easily sellable assets to meet its short-term financial obligations. This is vital for avoiding situations where the organization cannot pay its debts or cover expenses. Effective management includes monitoring cash flow, preparing for unexpected costs, and maintaining access to borrowing if needed. By anticipating potential liquidity shortages, businesses can take proactive measures to safeguard their financial health and maintain stability, even in challenging market conditions.