“Liquidity risk…is the most significant of all business risks in that the inability to fund a position imminently can lead directly to insolvency,” said John Jay, senior research analyst, Aite Group and author of “Leveraging Technology to Shape the Future of Liquidity Risk Management,” a report sponsored by Sybase.

The UK’s FSA has been the most aggressive regulator in pushing banks to monitor and be able to report on liquidity risk, but the concern has been growing among regulators around the world.

“The single most consistent and significant challenge identified by practitioners is that of gathering information from disparate systems,” said Sinan Baskan, Senior Director of Business Development, Financial Services, Sybase. “Lack of timely and accurate visibility into all components influencing bank liquidity hinders a financial institution’s ability to manage liquidity risk-for many large banks, the number of systems containing liquidity information is upwards of 25.”

The report contains several recommendations for effective risk management. Unfortunately, the press release didn’t provide a link to the report.

However, in a June report on liquidity risk, Jay said that
““Global regulators have put financial institutions on notice that the LRM process must now be a robust endeavor.Firms that fail to heed LRM regulatory imperatives run the risk of being forced to close shop; market participants will view these institutions as counterparty and funding risks — ironies that cannot be overlooked.”

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