The risk that an FI may not have enough capital to offset a sudden decline in the value of its assets relative to its liabilities is referred to as

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Insolvency risk refers to the risk that an FI may not have enough capital to offset sudden declines in the value of its assets relative to its liabilities. This is often referred to as being insolvent or bankrupt. Currency risk refers to the risk of losses due to fluctuations in exchange rates, sovereign risk refers to the risk of losses due to government actions or instability, while liquidity risk refers to the risk of not being able to meet short-term cash needs.

The Risk That an FI May Not Have Enough Capital