FirstCaribbean International Bank (Bahamas) Limited

Management’s Discussion and Analysis (continued)control deficiencies are communicated and remedied in atimely fashion across the Bank.Liquidity RiskLiquidity risk is defined as the risk that the Bank willexperience difficulty in financing its assets and meeting itscontractual payment obligations, or will only be able to doso at an unacceptably high cost. FirstCaribbean is exposed toliquidity risk through our general funding activities and in themanagement of our assets and liabilities.FirstCaribbean’s exposure to liquidity risk is governed by apolicy approved by the Board. The operation of the policyis delegated to management in the form of the Asset andLiabilities Committee (ALCO). The Bank’s ALCO is responsiblefor monitoring liquidity risk. Day-to-day management ofliquidity is handled by the Treasury team.The Bank performs stress tests and scenario analyses toevaluate the impact of stresses on its liquidity position. Thesetests are at both a Bank-specific and systemic risk level. Theresults are reported to the Board quarterly, and independentlyreviewed by the market risk function.14