Optimizing Risk and Return: Findings from an Example ALCO Report
Financial institutions and their Asset/Liability Management Committees (ALCOs) have been encouraged to upgrade their ALM practice to a more effective, outcome-based approach that informs decision making rather than simply “complying” with regulatory requirements. Since the crisis in 2009, examiners began asking more probing questions about institutions’ understanding of risk and the use of modeling tools. An effective ALCO report can help financial institutions demonstrate their ability to manage risk at acceptable levels. It should not only explain past risk factors in detail but also place a strong emphasis on perceived future risks and how to manage them.
Abrigo’s ALCO report is an in-depth analysis that shows financial trends in prior periods and proposes effective strategies to ensure that future performance improves current results. The ALCO report lays out forecasted results based on anticipated future rate movements and how they will affect the proposed risk management strategies.
Join this complimentary demo to learn:
- The important insights from an example ALCO report
- Underlying assumptions that financial institutions should be able to support
- How to communicate findings to management, the board, and examiners