Podcast: ALM 101 – Introduction to Interest Rate Risk and Liquidity Risk (02-11-14)

Presentation Description:
In this presentation, we will present the credit union’s leveraged balance sheet and demonstrate the interaction of the balance sheet and impact on net interest income. We will present the two most common approaches to estimating interest rate risk, income simulation, and net economic value. We will also explore the concept of liquidity risk and the basic methodologies for estimating this risk.

Full Presentation (or scroll down to listen to individual chapters):

Part 1:
Review of the nature of a financial institution’s balance sheet.
Discussion of how the balance sheet functions, how earning are made, and how capital is accumulated.

Part 2:
Examination of the nature of financial leverage and its impact on Net Income and Capital

Part 3:
Defining ALM and the responsibilities imposed on the credit union’s volunteers and staff

Part 4:
Identifying four significant ALM-related risks that impact the solvency and viability of the credit union

Part 5:
Introduction to the basic analytical tools used to estimate and manage balance sheet risks

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