What is ALM framework?
A full ALM framework focuses on long-term stability and profitability by maintaining liquidity requirements, managing credit quality, and ensuring enough operating capital. Unlike other risk management practices, ALM is a coordinated process that uses frameworks to oversee an organization’s entire balance sheet.
What are the main components in an ALM approach?
ALM includes the allocation and management of assets, equity, interest rate and credit risk management including risk overlays, and the calibration of company-wide tools within these risk frameworks for optimisation and management in the local regulatory and capital environment.
Which of three following are the pillars of the ALM process?
The ALM process rests on three pillars: • ALM Information System ▪ Management Information System ▪ Information availability, accuracy, adequacy and expediency • ALM Organisation ▪ Structure and responsibilities ▪ Level of top management involvement • ALM Process ▪ Risk parameters ▪ Risk identification Page 2 4 ▪ Risk …
What is ALM explain its objectives?
ALM addresses to the responsibility of managing the acquisition and allocation of funds to ensure adequate liquidity, maximum profitability and minimizing risks. Such exercise calls for monitoring the distribution of assets and liabilities in terms of volume, rates and mix.
What is ALM in treasury management?
Asset Liability Management (ALM) is an integral part of Bank Management. The responsibility of Asset Liability Management primarily lies with Treasury Division (Treasury Front Office) of the bank who co-ordinates balance sheet (asset liability) risk management. Managing the Balance Sheet. Growth in assets & liabilities.
What is ALM and its objectives?
What are the functions of ALM?
The scope of ALM function can be described as follows:
- Liquidity risk management.
- Management of market risks.
- Trading risk management.
- Funding and capital planning.
- Profit planning and growth projection.
Which is the top most committee to oversee the implementation of ALM system?
Asset-Liability Committee (ALCO), the top most committee to oversee the implementation of ALM system is to be headed by CMD /ED. ALCO considers product pricing for both deposits and advances, the desired maturity profile of the incremental assets and liabilities in addition to monitoring the risk levels of the bank.
What is the measure of ALM?
You Manage What You Measure ALM risk is the potential loss in value of an institution’s net asset value (the value of its assets minus the value of its liabilities) as a result of changes in market risk variables.