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

SAP Term: illiquidity

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: The state of a security or other asset that cannot easily be sold without a substantial loss in value.

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• Key Concepts: 
  Illiquidity is a term used to describe the difficulty of converting an asset into cash. It is a measure of how quickly and easily an asset can be sold without significantly affecting its price. In the context of SAP FS-LRM Liquidity and Risk Management, illiquidity is used to measure the liquidity risk of a financial institution. 
  
  How to use it: 
  SAP FS-LRM Liquidity and Risk Management provides tools to measure and manage illiquidity. It allows users to analyze the liquidity risk of their financial institution by assessing the liquidity of their assets and liabilities. The system also provides tools to monitor and manage liquidity risk over time. 
  
  Tips & Tricks: 
  When assessing illiquidity, it is important to consider both the short-term and long-term liquidity needs of the financial institution. Additionally, it is important to consider the potential impact of market volatility on illiquidity. 
  
  Related Information: 
  SAP FS-LRM Liquidity and Risk Management also provides tools for measuring and managing other types of risk, such as credit risk, market risk, and operational risk. Additionally, SAP FS-LRM provides tools for stress testing and scenario analysis.