Risk Moment RES

Liquidity risk is difficult to write about—let alone manage—because it can manifest itself in so many ways. Little has been published on the subject, which makes this book a godsend.

Focusing on banks, the book walks readers through proven techniques for assessing and managing liquidity risk. These aren’t pie-in-the-sky techniques or vaporware technology. In a very practical, methodical way, the authors lay out what is being done today in major financial institutions—techniques including balance sheet metrics, maturity mismatch analysis and scenario analysis. The book covers policies and procedures, contingency planning and so much more.

To round out the book and offer alternative perspectives, authors Matz and Neu recruited a number of professionals to contribute chapters. There is a case study looking at how one bank managed a funding crisis. Another chapter describes how UBS manages liquidity risk. There are ten contributed chapters in all.

The authors might have done a better job selecting those contributors. One of them, Louis Raffis, a senior vice president at KeyCorp, borrowed a definition for credit risk from riskglossary.com without citation.

In writing book reviews, I occasionally come across instances of plagiarism. When I do, I usually set the book aside and don’t review it. In this case, I think that would unfairly penalize Matz and Neu, who have worked hard to compile an outstanding book. It would also hurt the many readers who would benefit from finding out about this book. Since I am the injured party in this case, no one can say I am turning a blind eye to an ethical lapse. I have noted it here, and that should suffice.