Funding risk refers to the potential for an organization to face difficulties in obtaining the necessary funds to meet its financial obligations, particularly in the short term. This risk can arise from various factors, including market conditions, changes in investor sentiment, regulatory constraints, or disruptions in the funding markets. Organizations may struggle to refinance debt, secure new financing, or maintain liquidity, leading to potential defaults or operational challenges. Effective management of funding risk involves maintaining adequate liquidity reserves, diversifying funding sources, conducting stress tests, and establishing strong relationships with a variety of lenders and investors.

Basel scope:

• Pillar 2

Capital requirements:

Mitigated by Capital

Related Links:

•       Basel Framework