Effective liquidity risk management involves several strategies, including:
Cash Flow Management: Regularly monitoring and forecasting cash flows to ensure sufficient liquidity. Diversifying Funding Sources: Utilizing a mix of funding sources such as bank loans, bonds, and equity to reduce dependence on any single source. Maintaining Liquid Assets: Keeping a portion of assets in easily convertible forms like cash or marketable securities. Contingency Planning: Preparing for unexpected events with plans for emergency funding or asset sales.