The more flexibility a company has the lower its financial risk. It means having cash to meet expected needs like payroll, supplies, taxes, interest and principal payments. It also means having financial reserves to meet unusual needs like pension assessments, environmental outlays, legal judgements and the uninsured costs of disasters. The money can come from internal sources.
Operations are one source and cash, and marketable securities held in reserve are another.
Securities become a less desirable source of back-stop liquidity as maturities increase to more than one year or as their credit quality declines. Fixed income securities of any maturity are the least desirable form of liquidity reserve. Liquidity funding also can come from external sources. For most companies the main source is unused borrowing capacity from banks. Companies should always keep some borrowing capacity in reserve.