Difference between revisions of "Asset and Liability Management"
From Open Risk Manual
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== Service Domain == | == Service Domain == | ||
The unit overseeing the banks asset and liability policies and position | The unit overseeing the banks asset and liability policies and position | ||
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[[Category:BIAN Service Domain]] | [[Category:BIAN Service Domain]] | ||
[[Category:ALM]] | [[Category:ALM]] | ||
| + | [[Category:Prepayment Risk]] | ||
Latest revision as of 13:50, 1 December 2022
Definition
Asset and Liability Management (ALM) is a broad description of tasks with the precise composition depending on the organization / business model. For financial institutions, ALM may encompass managing risks and exposures in some of the following areas:
- Interest Rate Risk
- Liquidity Risk
- Currency Risk (FX Risk)
- Optionality risks (embedded options such as Prepayment Risk)
- Credit Risk may be also in scope (some aspects) but is more commonly identified as part of Credit Portfolio Management
Gap Management
An essential aspect of ALM is managing "gaps" (mismatches) of maturities and cashflows on either side of the Balance Sheet
Service Domain
The unit overseeing the banks asset and liability policies and position
