LIQUIDITY RISK MANAGEMENT Risk governance Liquidity risk oversight Liquidity management Internal stress testing Liquidity risk is the risk that the Firm will be unable to meet its contractual and contingent financial obligations as they arise or that it does not have the appropriate amount, composition and tenor of funding and liquidity to support its assets and liabilities. The Firm has a liquidity risk oversight function whose primary objective is to provide assessment, measurement, monitoring, and control of liquidity risk across the Firm. Liquidity risk oversight is managed through a dedicated firmwide Liquidity Risk Oversight group. The CTC CRO, who reports to the Firm’s CRO, is responsible for firmwide Liquidity Risk Oversight. Liquidity Risk Oversight’s responsibilities include:  Treasury and CIO is responsible for liquidity management. The primary objectives of effective liquidity management are to: As part of the Firm’s overall liquidity management strategy, the Firm manages liquidity and funding using a centralized, global approach in order to: In the context of the Firm’s liquidity management, Treasury and CIO is responsible for: and legal entities, taking into account legal, regulatory, and operational restrictions; Committees responsible for liquidity governance include the firmwide ALCO as well as line of business and regional ALCOs, the Treasurer Committee, and the CTC Risk Committee. In addition, the DRPC reviews and recommends to the Board of Directors, for formal approval, the Firm’s liquidity risk tolerances, liquidity strategy, and liquidity policy at least annually. For further discussion of ALCO and other risk-related committees, refer to Enterprise-wide Risk Management on pages 79–140. Liquidity stress tests are intended to ensure that the Firm has sufficient liquidity under a variety of adverse scenarios, including scenarios analyzed as part of the Firm’s resolution and recovery planning. Stress scenarios are produced for JPMorgan Chase & Co. (“Parent Company”) and the Firm’s material legal entities on a regular basis, and ad hoc stress tests are performed, as needed, in response to specific market events or concerns. Liquidity stress tests assume all of the Firm’s contractual financial obligations are met and take into consideration: Liquidity outflow assumptions are modeled across a range of time horizons and currency dimensions and contemplate both market and idiosyncratic stresses. Results of stress tests are considered in the formulation of the Firm’s funding plan and assessment of its liquidity position. The Parent Company acts as a source of funding for the Firm through equity and long-term debt issuances, and the IHC provides funding support to the ongoing operations of the Parent Company and its subsidiaries, as necessary. The Firm maintains liquidity at the Parent Company and the IHC, in addition to liquidity held at the • Establishing and monitoring limits and indicators, including liquidity risk appetite tolerances; • Monitoring and reporting internal firmwide and legal entity liquidity stress tests as well as regulatory defined liquidity stress tests; • Approving or escalating for review new or updated liquidity stress assumptions; • Monitoring liquidity positions, balance sheet variances and funding activities; • Conducting ad hoc analysis to identify potential emerging liquidity risks; and • Performing independent review of liquidity risk management processes. • Ensure that the Firm’s core businesses and material legal entities are able to operate in support of client needs and meet contractual and contingent financial obligations through normal economic cycles as well as during stress events, and • Manage an optimal funding mix and availability of liquidity sources. • Optimize liquidity sources and uses; • Monitor exposures; • Identify constraints on the transfer of liquidity between the Firm’s legal entities; and • Maintain the appropriate amount of surplus liquidity at a firmwide and legal entity level, where relevant. • Analyzing and understanding the liquidity characteristics of the assets and liabilities of the Firm, lines of business • Developing internal liquidity stress testing assumptions; • Defining and monitoring firmwide and legal entity-specific liquidity strategies, policies, reporting and contingency funding plans; • Managing liquidity within the Firm’s approved liquidity risk appetite tolerances and limits; • Managing compliance with regulatory requirements related to funding and liquidity risk; and • Setting transfer pricing in accordance with underlying liquidity characteristics of balance sheet assets and liabilities as well as certain off-balance sheet items. • Varying levels of access to unsecured and secured funding markets, • Estimated non-contractual and contingent cash outflows, and • Potential impediments to the availability and transferability of liquidity between jurisdictions and material legal entities such as regulatory, legal or other restrictions. 95 JPMorgan Chase & Co./2018 Form 10-K