Hi In this chapter it says that liquidity risk is the risk of short term cashflow mismatches, and that longer term cashflow mismatches are captured within insurance risk. Is it true that: Mismatching risk also included in market risk as often the present value of liabilities and assets will change with market movements and may move differently. But the insurance risk captures the longer term cashflow mismatches over time? Thank you,
Yes that's right. Longer-term cashflow mismatches also create market risk; the point you mention is referring to the difficulties in matching precisely due to the uncertainty of insured outcomes.
