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Overcoming Liquidity Challenges

The bank was facing a daunting task: preparing a Liquidity Assessment in accordance with the regulator's guidelines. The board had to assess the bank's liquidity risks and submit a document that would satisfy regulatory requirements.

At first, the Liquidity Assessment seemed straightforward, but as soon as they started working on it, the team faced a myriad of questions and challenges. What should the assessment contain? How would the regulator play the buffer number? And how much board input was warranted?

The bank risked ending up with a compromised final document. But then, Barbican Consulting proposed a solution that consisted of five stages.

First, they identified the main liquidity drivers, stress-tested the bank, and deliberated on how to determine the buffer. Then, they assembled the case, preparing a basic assessment document that could lead discussion. They then prepared the board, educating them on the liquidity regime, their responsibility, and the risks inherent in the balance sheet.

In stage four, they drafted the assessment submission to the board, prompting debate and review. Finally, in stage five, the board approved the assessment after revisions were made in accordance with their judgment.

The result was a well-organized and logical assessment, completed on time. The bank retained control over the quantitative and qualitative aspects of the document, taking advice from Barbican Consulting as deemed necessary. The external expertise kept costs down while also speeding up the process, with a critical and objective third-party opinion supporting the drafting process.

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