Operational Liquidity Risk

Operational liquidity risk refers to the potential for a company to face cash flow issues due to operational problems, such as delays in receiving payments, unexpected expenses, or difficulties in accessing funds. This type of risk can hinder a company's ability to meet its short-term financial obligations, like paying suppliers or employees. In liquidity risk management, businesses strive to ensure they have enough readily available cash or assets to navigate these challenges and maintain smooth operations, avoiding disruptions that could affect their overall financial health.