Table:
|  | CONSOLIDATED |  |
| --- | --- | --- |
|  | 2019 $’000 | 2018 $’000 |
| Cash and cash equivalents | 21,956 | 33,045 |
| Trade receivables and contract assets | 22,989 | 28,710 |
| Trail commission asset | 114,078 | 102,920 |
Paragraphs:
4.4 Financial instruments and risk management (continued)
Exposure to credit risk
The carrying amount of financial assets subject to credit risk at reporting date are as follows:
Managing our liquidity risks
Liquidity risk is the risk that we will be unable to meet our financial obligations.
The Group aims to maintain the level of its cash and cash equivalents at an amount to meet its financial obligations. The Group also monitors the level of expected cash inflows on trade receivables and contract assets together with expected cash outflows on trade and other payables through rolling forecasts. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted.
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the Group’s internal policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
The Group’s non-derivative financial liabilities consist of trade payables expected to be settled within three months. At 30 June 2019, the carrying amount and contractual cash flows is $25,153,000 (2018: $33,978,000).
Question:
What is liquidity risk?
Answer: the risk that we will be unable to meet our financial obligations