FRSGlobal has announced the availability of a configurable asset and liability management (ALM) solution for US banks. Using the solution, the company says that firms can begin to manage their ALM risk using a variety of sophisticated methods, including dynamic simulation modelling and stress testing, by following a six-step process.
The FRSGlobal ALM solution enables banks to put in place practices and processes to manage their ALM and liquidity risk that are in line with the US interagency guidelines issued on 17 March 2010.
The guidance outlines the process that financial institutions should follow to identify, measure, monitor, and control their funding and liquidity risk. The guidance emphasises the importance of cash flow projections, stress testing, and a well-developed contingency funding plan for measuring and managing liquidity risk.
Richard Ferrari, vice president – Americas, FRSGlobal, commented: “In light of the recent financial crisis, US banks are re-evaluating the way that they currently model their ALM risk. Many small and mid-size banks are currently outsourcing their analysis of ALM risk to an advisory firm or using internally developed Excel spreadsheets. They are finding that these methods are not adequate given the increased rigor and frequency that the regulators expect for the analysis of ALM risk.”
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