Balance Sheet Risk

These terms describe exposure and resilience concepts used in risk management for portfolios, treasuries, and counterparties.

Duration

Duration measures how sensitive the price of a fixed-income asset is to changes in interest rates, and it is often used to manage rate risk.

Liquidity Buffer

A liquidity buffer is a set of readily available assets kept to meet withdrawals, redemptions, or margin needs during stressed conditions.

Counterparty Exposure

Counterparty exposure is the risk that a trading partner, lender, custodian, or service provider fails to meet its obligations, causing losses or delays.

Basis Risk

Basis risk is the risk that two related prices (such as spot and futures, or two similar assets) move differently, reducing the effectiveness of hedges.