medium · FRM Part 2 Liquidity & Treasury Risk
What role do Early Warning Indicators (EWIs) play within a robust Contingency Funding Plan framework?
- Required Stable Funding, based on the illiquidity of assets, is the NSFR denominator, not EWIs.
- Effective EWIs are quantitative, measurable metrics, not purely qualitative gauges of risk appetite.
- NIM is a daily profitability metric, whereas EWIs flag forward-looking liquidity risk signals such as outflows.
- They are wired to calibrated thresholds that trigger pre-assigned escalation levels and authorities.
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