Two significant factors that contributed to SVB's failure were its lack of an effective contingency funding plan and its exposure to rising interest rates, which adversely affected its long-term securities holdings. As interest rates rose, SVB faced challenges due to unrealized losses in its securities portfolio and was unable to access necessary funding during a liquidity crisis.

A is incorrect because there is no evidence suggesting that SVB's failure was due to inadequate cybersecurity responses or overinvestment in the energy sector. The primary issues were related to its liquidity risk management and the impact of rising interest rates on its securities portfolio.

B is incorrect as SVB’s failure was not primarily caused by reliance on short-term international funding or expansion into global equity markets. The bank's difficulties were more closely related to its domestic deposit concentration and investment strategies.

D is incorrect because SVB's collapse was not driven by a focus on consumer credit expansion or failure to adapt to international banking regulations. The bank's issues were more directly related to its specific deposit base, investment strategy, and liquidity risk management.

Things to Remember

• Liquidity risk management is crucial for banks to ensure they have enough funding to meet their obligations, especially during times of financial stress.

• Contingency funding plans are essential for banks to outline how they will address funding shortfalls in various scenarios.

• Interest rate risk is the risk that changes in interest rates will adversely impact a bank's financial performance, especially for institutions with significant exposure to interest rate-sensitive assets or liabilities.

• Securities portfolios can be affected by changes in interest rates, leading to unrealized gains or losses that impact a bank's overall financial health.