This chapter provided an in-depth look at the measurement and on-balance-sheet management of liquidity risks. Liquidity risk is a common problem that FI managers face. Welldeveloped policies for holding liquid assets or having access to markets for purchased funds are normally adequate to meet liability withdrawals. Very large withdrawals, however, can cause asset liquidity problems to be compounded by incentives for liability claimholders to engage in runs at the first sign of a liquidity problem. The incentives for depositors and life insurance policyholders to engage in runs can push normally sound FIs into insolvency.