(10)Due to the potential impact of liquidity risk on an investment firm’s functioning, investment firms should closely monitor such risk. In line with Article 29 of Directive (EU) 2019/2034, investment firms are to have robust strategies, policies and processes in place, including monitoring liquidity risk and confronting liquidity shortages. It is therefore necessary to specify what competent authorities should assess to evaluate the effectiveness of the liquidity risk management and control of investment firms.