Funding risk definition

Funding risk means the risk that the institution will not have stable sources of funding in the medium and long term, resulting in the current or prospective risk that it cannot meet its financial obligations, such as payments and collateral needs, as they fall due in the medium to long term, either at all or without increasing funding costs unacceptably.

Funding risk means the risk the bank lacks stable funding sources in both medium and long-term period, that would result into the current or future risk the bank fails to meet the financial obligation that mature in either medium or long-term period, or without increasing the funding costs;

Examples of Funding risk in a sentence

• Funding risk is the risk that market conditions will impact the Company’s ability to raise capital through equity markets under acceptable terms and conditions.

• Funding risk is the risk that the Company may not be able to raise equity financing in a timely manner and on terms acceptable to management.

• Funding risk arises when the necessary liquidity to fund illiquid asset positions cannot be obtained at the expected terms and when required.

• Funding risk strategies shall take into account the liquidity status in the market and how unexpected changes would affect the company’s risks.

• Funding risk centres on the ability to re-finance or raise new debt at acceptable pricing and maturity terms.

• The answers shown in parts (a), (b), and (c) for Liquidity risk focus on Funding risk, but credit was also given for Asset risk if it was related to appropriate examples that were specific to the scenario.

• Funding risk is defined by the Bank as the risk of not being able to raise further funding to allow it to continue funding its operations or meet its cash flow obligations.

• Funding risk relates to the potential inability to raise additional capital or liquidity when required in order to maintain the resilience of the balance sheet.

• Funding risk states the risk of not meeting cash outflows completely because of maturity mismatch between assets and liabilities while market liquidity risk states the risk of not liquidating assets because of a collision in market conditions or insufficient market depth.

• Funding risk is the risk of not maintaining a diversified, stable and cost-effective funding base.