

Liquidity risk is the risk that an individual or organisation will be unable to meet short-term financial obligations as they fall due, without incurring significant losses or disruption.

Liquidity risk may result from delayed customer payments, unexpected expenses, or limited access to funding.
Over-reliance on short-term borrowing or poor cash planning can also increase exposure.
Market disruptions can further restrict access to liquid funds.
Liquidity risk is commonly classified into:
Each type affects financial stability differently.
Liquidity risk is managed through:
Proactive management reduces vulnerability.