What is idiosyncratic stress in SAP FS-LRM - Liquidity and Risk Management?

SAP Term: idiosyncratic stress

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: Financial stressor that acts upon a particular financial institution.

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• Key Concepts: 
  Idiosyncratic stress is a term used in the FS-LRM Liquidity and Risk Management component of SAP. It refers to the risk of a company’s liquidity position being affected by events that are specific to that company, such as a change in its credit rating or a change in its customer base. 
  
  How to use it: 
  Idiosyncratic stress can be used to assess the risk of a company’s liquidity position being affected by events that are specific to that company. This can be done by analyzing the company’s financial statements, looking at changes in its customer base, and assessing its credit rating. 
  
  Tips & Tricks: 
  When assessing idiosyncratic stress, it is important to consider both short-term and long-term risks. Short-term risks may include changes in customer base or credit rating, while long-term risks may include changes in the macroeconomic environment or changes in the company’s competitive landscape. 
  
  Related Information: 
  Idiosyncratic stress is closely related to systemic risk, which is the risk of a company’s liquidity position being affected by events that are not specific to that company but rather affect the entire market or industry. Systemic risk can be assessed by analyzing macroeconomic indicators such as GDP growth, inflation, and interest rates.