Liquidity Management & Contingency Fund Planning Services

Optimize Your Cash Flow with Liquidity Risk Management Services

Unlocking the full potential of your financial institution requires effective liquidity management strategies. Our liquidity management services provide a robust framework for managing liquidity, ensuring regulatory compliance, and optimizing cash flow. With a detailed approach to the liquidity management process, we help you navigate the complexities of cash and liquidity management to maintain financial stability and operational efficiency.

Liquidity Risk Review & Model Back-Testing

Effective risk control requires periodic independent reviews of your liquidity risk management process and validation of your liquidity risk measurement systems to ensure their integrity, accuracy, and reasonableness.

Liquidity risk, or the risk that financial institutions may be unable to meet certain short-term obligations, is increasingly the focus of internal governance and regulatory concern. Ensure your institution is prepared for future cash flow needs and compliant with regulatory guidance with a liquidity risk review from Young & Associates.

Our liquidity services help you meet the requirements of the Joint Policy Statement on Interest Rate Risk (IRR), as well as the Interagency Guidance on Funding and Liquidity Risk Management. Young & Associates can assist you in assessing the following:

• The adequacy of the institution’s internal control system
• Personnel’s compliance with the institution’s internal control system
• The appropriateness of the institution’s risk measurement system
• The accuracy and completeness of the data inputs
• The reasonableness and validity of scenarios used in the risk measurement system
• The reasonableness and validity of assumptions
• The validity of the risk measurement calculations within the risk measurement system, including back-testing of the actual results versus forecasted results and an analysis of various variance sources

Our detailed liquidity risk review reports assess each of these areas, describe the findings, provide suggestions for any corrective actions, and include recommendations for improving the quality of the bank’s risk management systems and their compliance with regulatory guidance. Additionally, we offer comprehensive backtesting for liquidity, ensuring the validity and reliability of your liquidity model. Our liquidity reviews are customizable to suit your bank or credit union’s specific needs.

Young & Associates provides expert guidance in developing and enhancing your liquidity management strategy. By conducting thorough assessments and backtests for liquidity, we help ensure your institution’s liquidity management processes are robust and compliant.

Contact us to speak with one of our experienced liquidity risk consultants about how our cash and liquidity management services can support your financial institution.

Liquidity Program & Contingency Funding Plan Development

Developing robust liquidity management strategies and contingency funding plans is essential for mitigating liquidity risk. We assist in defining general liquidity strategies, policies, and liquidity metrics tailored to your institution’s business plan and risk profile. We also assist in developing procedures for addressing liquidity shortfalls in emergency situations. Our customized Contingency Funding Plans identify potential stress events, define relevant early warning indicators and parameters for liquidity stress testing, identify alternative sources of funds and funding strategies, and define lines of responsibility and communication. This includes a detailed Crisis Action Plan to cover different stress scenarios.

Liquidity Policy & Contingency Funding Plan Review

Reviewing and updating your liquidity-related policies is crucial for maintaining a strong liquidity management framework. Y&A can assist with the review of your bank or credit union’s existing liquidity-related policies and, based on the evaluation of your institution’s existing balance sheet composition and other characteristics, provide written recommendations for changes or additions to the existing policy/plan. Our assistance focuses on addressing the following:

• Primary and contingent funding sources
• Funding concentrations and limits
• Stress events that are likely to increase the bank’s liquidity risk
• Early warning indicators that would help identify an emergence of a potential stress event
• Funding strategies for different stress levels
• CFP team, responsibilities, and communication flow
• Action plan for different stress situations
• Cash flow planning and contingent funding monitoring reports
• Stress testing / alternative scenario analysis

Liquidity Contingency Planning Assistance

As we face abrupt changes in the strategic focus, taking the time to diagnose strengths and weaknesses and to plan ahead is a worthwhile exercise. Y&A is here to assist you in every step of the planning process and generating valuable support information for your strategic decision making:

• Assess the range of possible out comes of contemplated business strategies
• Line up contingency funding plans and position your bank for new opportunities
• Ensure regulatory compliance and adequacy of your risk management practices

Streamline your planning with our liquidity cash flow forecasting and stress testing tools
Our dynamic Microsoft Excel® tool is designed to assist in performing quantitative liquidity assessments as required by the latest regulatory guidance. It includes a base case cash flow forecast and multiple stress scenarios covering a 12-month horizon and allows for easy what-if modifications to the base case assumptions to monitor the impact on primary and contingent liquidity. The liquidity stress testing can be performed by using a combination of stress constraints in short-term or prolonged stress events. The model also calculates liquidity coverage ratios and other liquidity metrics. Over the years, our methodology passed through a number of regulatory exams at our client banks.

Get expert guidance in developing new or enhancing existing liquidity programs and contingency funding plans
We can help you define general liquidity strategies, policies, and liquidity metrics that match your institution’s business plan and risk profile. We can also assist in the process of developing procedures for addressing liquidity shortfalls in emergency situations. Our customized Contingency Funding Plan will identify potential stress events, define relevant early warning indicators and parameters for liquidity stress testing, identify alternative sources of funds and funding strategies, define lines of responsibility and communication, and establish a detailed Crisis Action Plan.

Get hands-on assistance with quantitative cash flow forecasts and stress testing
We can assist in developing quantitative cash flow forecasts, measuring primary liquidity position and availability of contingent liquidity, as well as and performing various liquidity analyses and monitoring dynamic cash flow ratios and other liquidity metrics. We can also assist in performing Liquidity Stress Tests, including identification of various stress constraints, analysis of potential funding erosion in a stress situation, impact of stress on the availability of contingent funding, and the primary liquidity position of the institution.

Ensure regulatory compliance with independent reviews and audits of existing systems
Young & Associates, Inc. can assist in assessing the adequacy of the bank’s internal control systems, the accuracy and completeness of the data inputs, the reasonableness of scenarios and assumptions used in the risk measurement system, as well as the model validation and back-testing. Our comprehensive review reports describe the finding and provide specific suggestions for improving the quality of the bank’s risk management systems.

Liquidity Stress Testing & Cash Flow Projections

Our services include comprehensive liquidity stress testing and cash flow projections to help you manage liquidity effectively. We assist in developing quantitative cash flow forecasts and performing various liquidity analyses. This includes estimating anticipated funding needs and available funding sources, monitoring cash flow gaps, and measuring primary liquidity positions and the availability of contingent liquidity. Additionally, we track dynamic cash flow ratios, funding concentrations, and other critical liquidity metrics.

We specialize in conducting thorough liquidity stress tests, ensuring your institution can withstand various stress scenarios. Our expertise includes guiding you through the liquidity risk stress testing process, keeping your analyses current, and developing customized stress testing models using Microsoft® Excel for future use. These tools and insights enable you to perform rigorous tests of liquidity, ensuring robust risk management and financial stability.