Lausafjárhætta
Lausafjárhætta, a term originating from Icelandic, translates to "liquidity risk." It refers to the possibility that an entity, whether an individual, company, or financial institution, may not be able to meet its short-term financial obligations as they fall due. This inability to readily convert assets into cash without significant loss is the core of liquidity risk.
There are generally two primary types of liquidity risk. Funding liquidity risk, also known as cash flow
The consequences of unmanaged lausafjárhætta can be severe. For businesses, it can lead to a halt in