Risk 2003 Europe: Liquidity risk best practice needed, says Nordea’s Hansen

The absence of either established best practice or sufficient academic theory in the area of liquidity risk management is problematic, said Mads Smith Hansen at the eighth annual Risk Europe conference in Paris yesterday.

Hansen, who is responsible for liquidity risk management within Nordea’s group treasury department, faces the tough challenge of managing liquidity risk across the bank’s holdings in four countries, meeting the differing demands of four sets of regulators and dealing in multiple currencies.

He added that the interaction between credit and liquidity risk is increasingly problematic. Credit risk limits, he noted, prevent the free flow of liquidity and this can cause considerable difficulties for