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Treasury risk Meaning

Treasury risk comprises the financial exposures associated with managing a firm’s cash and liquidity. This includes market risk (e.g., fluctuations in interest rates or exchange rates that affect the value of cash and short-term investments), credit risk (counterparty default on deposits or short-term loans), and operational risk (errors, fraud, or technological failures in cash management processes).

In the crypto industry, treasury risk also encompasses price volatility of digital assets, custody risk (e.g., theft or loss of private keys), and compliance risk related to anti-money laundering regulations.

Effective treasury risk management involves diversifying holdings, implementing strong internal controls, conducting stress tests, and maintaining contingency plans to ensure sufficient liquidity during market disruptions.

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