Liquidity risk and Natural capital: Difference between pages

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Liquidity risk has a number of important dimensions for the corporate treasurer.  
Natural Capital can be defined as the world’s stocks of natural assets which include geology, soil, air, water and all living things.  


These include the corporate organisation as a whole, individual investments, and the wider markets for borrowing and lending.
Examples include global forests and their role in controlling greenhouse gases, insects as pollinators, water resources and the ecosystems of the planet.


#For an organisation, liquidity risk is the risk that the organisation ceases to have access to the cash it needs in order to meet its financial obligations as they fall due. This can arise from a number of different causes, both internal and external to the organisation.
Just as companies need financial capital to support their business so too does the world need natural capital to support human life.
#For an individual investment, liquidity risk is the risk that the investment cannot be turned into cash quickly and without significant loss in value.
#Liquidity risk at the market level includes the drying up of borrowing markets, disrupting the financing of individual organisations.


Poor management can result in depletion of financial capital and likewise natural capital needs to be managed and valued. 


The overall aim of liquidity management is to ensure that the company can meet its payment obligations as they fall due.  
Putting an economic value on natural capital and accounting for its use or renewal are behind the concepts of sustainability accounting or integrated accounting.


Consequently, in its broadest terms, liquidity risk includes all the risks that adversely affect liquidity management, i.e. that impact the organisation's ability to pay.


When managing liquidity a treasurer needs to consider the wider environmental aspects such as the riskiness of the sector or industry, market and economic issues, as well as the more direct aspects of delivering liquidity to the business.  
Natural capital is also known as natural resources.




For this reason liquidity risk is integrated with business strategy and the fortunes of the business itself, and treasurers need to understand the business model of their organisations to properly manage liquidity risk.
==See also==
 
* [[Capital]]
 
* [[Ecosystem services]]
== See also ==
* [[Environmental concerns]]
* [[Cash]]
* [[Environmental profit and loss]]
* [[Documentation risk]]
* [[Human capital]]
* [[Funding liquidity risk]]
* [[Intellectual capital]]
* [[Funding risk]]
* [[Manufactured capital]]
* [[Liquidity]]
* [[Natural Capital Coalition]]
* [[Market liquidity risk]]
* [[Natural Capital Committee]]
* [[Maturity mismatch]]
* [[Natural Capital Protocol]]
* [[Guide to risk management]]
* [[Relationship capital]]
* [[Social capital]]
* [[Sustainability]]
* [[Sustainability bond]]
* [[SHE]]
* [[System of Environmental-Economic Accounting]]
* [[World Forum on Natural Capital]]




===Other links===
===Other links===
[http://www.treasurers.org/node/5644 Liquidity risk management, Will Spinney, ACT 2010]
[https://naturalcapitalforum.com/news/article/sustainability-jargon-buster--10-essential-terms-for-ceos Sustainability jargon buster] www.naturalcapitalforum.com


[[Category:Manage_risks]]
[[Category:Ethics]]
[[Category:Risk_frameworks]]
[[Category:Liquidity_management]]

Revision as of 18:09, 23 August 2021

Natural Capital can be defined as the world’s stocks of natural assets which include geology, soil, air, water and all living things.


Examples include global forests and their role in controlling greenhouse gases, insects as pollinators, water resources and the ecosystems of the planet.

Just as companies need financial capital to support their business so too does the world need natural capital to support human life.

Poor management can result in depletion of financial capital and likewise natural capital needs to be managed and valued.

Putting an economic value on natural capital and accounting for its use or renewal are behind the concepts of sustainability accounting or integrated accounting.


Natural capital is also known as natural resources.


See also


Other links

Sustainability jargon buster www.naturalcapitalforum.com

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