Following the failure of several large financial institutions due to the global financial crisis in 2008, Liquidity Risk Management was placed under the spotlight because of the potential for extreme systemic failure. Assuming you are the Chief Financial Officer (CFO) of a leading Deposit Financial Institution or using a Depository Financial institution of your choice, advise your Board of Directors of the liquidity risk exposure by completing the following:
Identify three (3) areas of risk on both sides of the Balance Sheet and how these risks could reduce the Net Deposit Drain on the institution.
Develop three compelling recommendations your Depository Institution could implement to mitigate the liquidity risk areas.