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Lease Risk Management Strategies

The document discusses liquidity and operational risks that lessees may face when entering long-term leases, tying up capital and reducing flexibility, and both lessors and lessees should conduct due diligence to understand and mitigate risks.

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Kristeene Mhelle Sabala
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3 views1 page

Lease Risk Management Strategies

The document discusses liquidity and operational risks that lessees may face when entering long-term leases, tying up capital and reducing flexibility, and both lessors and lessees should conduct due diligence to understand and mitigate risks.

Uploaded by

Kristeene Mhelle Sabala
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

1.

Liquidity Risk: For lessees, entering into long-term leases can tie up capital and
reduce liquidity. It may restrict their ability to invest in other opportunities or
respond to unforeseen financial challenges.
2. Operational Risk: Lessees may face operational risks associated with the leased
asset. This includes risks such as equipment breakdown, technological failures, or
disruptions in the supply chain related to the asset.

To mitigate these risks, both lessors and lessees should conduct thorough due diligence,
carefully review lease agreements, assess the financial health and creditworthiness of the
counterparty, and monitor market conditions. It is also advisable to seek professional
advice from accountants, lawyers, and industry experts to understand and mitigate
specific risks associated with leasing activities

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