Managing Liquidity Risk in Today’s Banking Environment

Article

Sixteen years after the 2008 financial crisis, the financial sector faces new risks driven by geopolitical instability, economic turmoil, and the pandemic. Adapting risk management strategies is essential, with an emphasis on understanding shifting deposit behaviors, rigorous stress testing, and cross-departmental collaboration.

Aug 23, 2024

Ian Broff, AVP, Head of Interest Rate & Liquidity Risk and Bank Financial Risk, USAA Federal Savings Bank

Managing Liquidity Risk in Today’s Banking Environment

The financial sector must adapt its risk management strategies due to the new challenges posed by geopolitical instability and economic turmoil.
Understanding changing deposit behaviors and implementing rigorous stress testing is essential for effective liquidity and market risk management.
Collaboration between market risk, Treasury, and Finance departments is crucial for comprehensive stress testing and timely adjustments.
Future challenges include addressing risks associated with commercial real estate and sectors that are underperforming, which may impact bank capital and asset quality.