Liquidity at risk

The Liquidity-at-Risk (short: LaR) is a measure of the liquidity risk exposure of a financial portfolio.

It may be defined as the net liquidity drain which can occur in the portfolio in a given risk scenario. If the Liquidity-at-Risk is greater than the portfolio's current liquidity position then the portfolio may face a liquidity shortfall.

Liquidity-at-Risk is different from other measures of risk based on total loss, as it is based on an estimate of cash losses, or liquidity outflows, as opposed to total loss.

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