Fri 05 Sept 2025 - This webinar explores the foundational relationship between liquidity risk and credit risk, emphasising their central role in modern financial systems. All risks originate from transactions between parties: when such transactions become unstable or fail, liquidity risk arises. In turn, this instability can lead entities to seek external funding, thereby giving rise to credit risk. These two types of risks are deeply interconnected and often act as amplifiers for other forms of financial risk.
The session will examine liquidity and credit risk across various domains, including insurance companies, banks, and capital markets鈥攑articularly derivatives鈥攚here these risks are most prevalent. Real-life case studies will form a core part of the discussion, with a special focus on the collapse of Silicon Valley Bank (SVB) in the US. This incident will be analysed to understand what went wrong, the regulatory frameworks in place, and how effective risk management techniques could have potentially averted the crisis.
Participants will gain insight into how liquidity risk leads to credit risk and how the latter is addressed within banking institutions, which are heavily involved in lending. The webinar will delve into the management of credit risk, the role of counterparty risk, and the tools currently used to mitigate these challenges. Additional case studies from recent events will be used to highlight failures in credit risk management that escalated into systemic issues.
The session will conclude with an in-depth discussion on the role of actuaries in identifying, quantifying, and managing liquidity and credit risks. It will showcase the value actuaries bring across sectors by applying their analytical skills and risk management frameworks to stabilize financial ecosystems.
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