Duration 5 days – 35 hrs
Overview.
This Liquidity Risk Management Training Course is tailored for banking professionals in the Philippines, focusing on the skills and knowledge necessary to manage liquidity risk effectively. Participants will learn how to assess liquidity risk, apply regulatory standards, and develop strategies to maintain adequate cash flow and ensure stability during periods of financial stress.
Objectives
- Identify, measure, and manage liquidity risks.
- Ensure compliance with regulatory liquidity standards, including the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).
- Implement liquidity stress testing to assess resilience under adverse conditions.
- Develop effective liquidity risk management policies and contingency funding plans.
Audience
- Risk Managers and Treasury Professionals involved in managing liquidity and capital.
- Financial Analysts and Asset Managers responsible for assessing cash flow and funding needs.
- Compliance Officers who oversee regulatory compliance in banking institutions.
- Finance and Accounting Professionals in the banking sector.
- Bank Executives seeking to improve their institution’s resilience against liquidity challenges.
Pre- requisites
- A basic understanding of banking and finance principles.
- Familiarity with risk management concepts and regulatory frameworks.
- Experience in financial analysis or treasury functions (recommended but not mandatory).
Course Content
Day 1: Introduction to Liquidity Risk Management
Understanding Liquidity Risk in Banking
- Definition and types of liquidity risk
- Importance of liquidity risk management in financial institutions
- Regulatory requirements and global standards (Basel III)
Liquidity Risk Measurement Basics
- Key liquidity indicators
- Cash flow forecasting and monitoring
- Tools for measuring liquidity
Day 2: Regulatory Standards – Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)
Liquidity Coverage Ratio (LCR)
- Overview of the LCR and its role in maintaining short-term liquidity
- Calculating high-quality liquid assets (HQLA)
- Practical examples of calculating LCR
Net Stable Funding Ratio (NSFR)
- Understanding the purpose of NSFR for long-term funding stability
- Key components of the NSFR calculation
- Practical exercises on NSFR
Hands-On Workshop
- Group exercise: Applying LCR and NSFR calculations to sample data
Day 3: Liquidity Risk Stress Testing
Introduction to Stress Testing
- Importance of stress testing in liquidity risk management
- Types of stress tests: scenario analysis and sensitivity analysis
Implementing Liquidity Stress Testing
- Developing scenarios to simulate liquidity stress events
- Interpreting stress test results to make informed decisions
Workshop on Stress Testing
- Conducting a hands-on stress test using sample banking data
Day 4: Developing Liquidity Risk Management Policies
Liquidity Risk Management Frameworks
- Key elements of a robust liquidity risk management framework
- Policies for managing short- and long-term liquidity
Liquidity Monitoring and Reporting
- Establishing liquidity metrics and dashboards
- Communication and escalation protocols for liquidity issues
Case Studies
- Examining real-world examples of effective and ineffective liquidity management
Day 5: Contingency Funding Plans and Final Workshop
Contingency Funding Plans (CFPs)
- Importance of CFPs in managing unexpected liquidity events
- Developing CFPs tailored to organizational needs
- Sources of contingency funding
Integrating CFPs with Liquidity Policies
- Building alignment between CFPs and liquidity risk management policies
- Testing CFP effectiveness
Final Workshop
- Group activity: Developing a comprehensive liquidity risk management plan and presenting it to the class
