The first half of 2020 has been very challenging for the Australian banking sector with major bush fires, then several severe storms (e.g. Canberra hailstorm) and now the COVID-19 outbreak and shutdown of the Australian economy. We have discussed, how the impact these eventsparticularly COVID-19has had on the banks as well as how the banks and regulators have responded to the challenges. You are the team leader of the Strategy and Operations team at the Commonwealth Bank of Australia. The CEO and Board has asked you to write a series of three short memos outlining the impact that COVID-19 has had on the bank and your recommendations for operations in the next 6 to 12 months. Each of the memos will focus on one fundamental risk and should be written independent of the other memos so that each memo is self-contained (e.g. when reading memo 1, you do NOT need to read the memos 2 and 4 to understand memo 1).

Question 3 Write a memo outlining the impact that COVID-19 has had on liquidity risk for the CBA. Suggest some strategies the bank can use to manage this risk in the next 6-12 months.