Are you ready for the more onerous liquidity risk management requirements that were recently proposed by the Basel Committee and the Committee of European Banking Supervisors?

In September 2008, the Basel Committee and the Committee of European Banking Supervisors both released revised principles and recommendations containing new regulatory requirements for the management of liquidity risk, i.e. Principles for Sound Liquidity Risk Management and Supervision (by the Basel Committee) and Second Part of CEBS's Technical Advice to the European Commission on Liquidity Risk Management (by the CEBS).
The questions below, that anybody with a broad view on the organization should be able to answer in the time span of a few minutes, attempt to cover many of these requirements. They should either give you comfort that the company is on track to reach liquidity risk management best practice, or will give an indication of where the major improvement areas are. The questionnaire is designed in such a way that ‘I fully agree’ answers would indicate that you are close to best practice. Obviously, this quick check does not intend to be a Self Assessment nor a gap analysis. However, it should provide a fair view on the major strengths and weaknesses in the area of liquidity risk management.