What is Basel III ratio in SAP FS-LRM - Liquidity and Risk Management?

SAP Term: Basel III ratio

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: A key figure which is calculated according to the Basel III rules.

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• Key Concepts: 
  Basel III ratio is a liquidity risk management tool used to measure the liquidity of a financial institution. It is part of the Financial Services Liquidity and Risk Management (FS-LRM) component of SAP. The Basel III ratio is calculated by dividing the total amount of liquid assets held by a financial institution by its total net cash outflows over a certain period of time. 
  
  How to use it: 
  The Basel III ratio can be used to measure the liquidity of a financial institution and to identify potential liquidity risks. It can also be used to compare the liquidity of different financial institutions. The Basel III ratio can be calculated using the FS-LRM component of SAP. 
  
  Tips & Tricks: 
  When calculating the Basel III ratio, it is important to consider both the total amount of liquid assets held by a financial institution and its total net cash outflows over a certain period of time. It is also important to consider any potential changes in the market that could affect the liquidity of a financial institution. 
  
  Related Information: 
  The Basel III ratio is part of the Financial Services Liquidity and Risk Management (FS-LRM) component of SAP. Other components of FS-LRM include Credit Risk Management, Market Risk Management, and Operational Risk Management.