Off balance sheet risk

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1. Liquidity and funding risk in banks.

Off balance sheet sources of liquidity risks for banks include items which might cause demands for additional funding in the future. These include:

  • Contingent liabilities such as guarantees.
  • Undrawn lending facilities.
  • Derivative instruments.
  • Securitisation special purpose vehicles.


2. Capital risk in banks.

The risk of adverse effects on the bank's profits and capital, from similar off balance sheet sources.


3.

Any risks to an organisation arising from events, contingencies or relationships not recorded in the organisation's balance sheet.

For example, repo-to-maturity transactions.


See also