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Asset Liability Management | Risk Factors [Video]

Asset Liability Management | Risk Factors

We know that ALM is about properly matching assets and liabilities to manage risk, but what specific risks are faced by a typical bank?

The most significant risk is interest rate risk.

There are several different types of interest rate risk, as discussed below.

Interest rate gap risk occurs when:
(a) there is a mismatch between floating-rate and fixed-rate instruments
(b) the timing of rate-setting for floating-rate instruments is not aligned

Interest rate basis risk occurs when floating-rate assets and floating-rate liabilities are set to different indexes.

Option risk occurs when a counterparty exercises an option that changes the expected cash flows of a financial instrument (terminating a contract early, altering the contract, etc.).
• This is a type of interest rate risk because option risk is closely linked to the interest rate

Prepayment risk occurs when a borrower repays the principal sooner than required, and the bank gets stuck re-lending the money at a less favorable interest rate.
• Prepayment risk is a specific type of option risk and is closely linked to the interest rate
• Prepayment happens when interest rates decline and borrowers decided to refinance

Banks also face risk factors aside from interest rate risks. These include:

Exchange rate risk occurs when exchange rates change and the bank translates foreign currency back into its functional currency (the bank will recognize a gain or a loss).

Price risk occurs when there are changes to the price of investments in a bank’s trading portfolio.

Credit risk occurs when a counterparty defaults (e.g., a borrower fails to pay).

Liquidity risk occurs when the bank is unable to satisfy its obligations without suffering extreme losses when one or more sources of funding suddenly become unavailable.
• A liquidity crisis could be caused by a run on the repo market, an inability to roll over maturing debt, etc.
• Liquidity risk can be severe and cause the bank to become insolvent

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Join me live for CIMA SCS Feb 2022 Coaching Intro Session | CIMA Strategic Case Study Pixlwizz | AZB [Video]

REGISTER NOW for the Live Coaching Commencement Session (on 1st of January 2022) Open Invitation to any Learner. Link given below.LINK https://bit.ly/3HONDB5VISIT our Official CIMA SCS Website for more details on our Coaching Program.https://cimascs.com/ Download the CIMA SCS Early Prep Invitation Deck (in the Video with more details) via the below Link. https://bit.ly/3HTRk8mIf you are interested, to start your CIMA SCS Feb 2022 Exam Prep with OTQ Essentials Revision, share the below details with us now to azman.branudeen@gmail.com.NameSelected Option (Coach/ Mentor/ Absolute/ Complete)Gmail AddressWhatsApp ContactCountry of Exam DOWNLOAD the PDF of the Pixlwizzs' SWOT Analysis using the below link.https://drive.google.com/drive/folders/15tKPPmKgIeEEOBQhsV3VQRqKZkSpQF79?usp=sharing Visit my Dedicated YouTube playlist with exclusive content from my Coaching Program catered to the November 2021 & February 2022 Examination Session! There is a ton of content here that can help you and will be the perfect support toolset to use with my Guided Prep Solution.https://youtube.com/playlist?list=PL2zsBoa-zxMhZpEfKlb9JcycdXfNqBWF2 To get 1-1 Career Guidance/ Educational Counselling/ Teacher Coaching and Mentoring Services by me, review the details via the below link and Register NOW!!!https://forms.gle/11ETUQrr5MbP5Bvf8 Sign Up for my Newsletter via the link and the updates on all educational and professional initiatives by AZB Education.https://bit.ly/3trOalt Tune in and subscribe to the channel to stay updated on the content.Link - https://www.youtube.com/c/AzmanBranudeenI am using my YouTube channel as a medium to support students who are scattered around the globe with the genuine hope that it will elevate your standards of personal growth, professional development and education. Check out my Facebook reviews page to see what some of my esteemed and humble learning partners have to say about the process of working with AZB Education at the FB Reviews Link (below).https://www.facebook.com/AzmanBranudeen/reviewsConnect with me on social media, become part of my Patreon Community and learn about me via LinkedIn or even write to me via mail. Blog - https://goodteacherguide.com/ Patreon - https://www.patreon.com/azmanbranudeen LinkedIn - https://www.linkedin.com/in/azmanbranudeen/ Instagram - https://www.instagram.com/azman_branudeen/ Facebook - https://www.facebook.com/AzmanBranudeen/ Email - azman.branudeen@gmail.com--As time permits I do try to upload relevant content for students and their personal development. Write to me and connect with me. AZB is committed to collaborative development efforts for students around the world. Write to me directly for any other inquiries or even to say Hi and ask anything you want. I am a content creator developing content for students and professionals for their personal development and professional growth. My company is AZB Education, which is committed to collaborative development efforts for learners around the world. You can let me know of specifics you want me to touch on, with respect to Personal Development and Professional Growth. Because I am the best in the game, and when I am not, I figure out how to become the best. Just like how life works! Keep Learning and Keep Living!2021 © Azman Branudeen & AZB Education. All Rights Reserved.#CIMA #AzmanBranudeen #StrategicCaseStudy #AdvancedPerformanceManagement #CIMASCSNovember2021 #CIMASCSFebruary2022 #AZB #SCSwithAZB #AZBEducation #PasswithAZB #SCS #BestLecturer #BestStudent #ACMA #CGMA #AICPA #CIMASCSwithAZB #ACCA #PersonalDevelopment #ProfessionalDevelopment #CareerGrowth #Education #SocialInfluencer #Teacher #YouTuber #Mentor #Trainer #Lecturer #StoryTeller #Speaker #ContentCreator #EducationManagement #Educate #Empower #UnleashYourPotential #PersonalGrowth #UnleashYourPotentialwithAZB

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Resources for Accountants

From Lawyer in Bolivia to Successful US Accountant: 3 Steps to Make It Happen [Video]

Ever wondered if you can switch careers and build a successful accounting career in the USA as an immigrant? 🌎 Meet Monica, a former lawyer from Bolivia who followed 3 key steps to transition into accounting in the U.S.! In this interview, we cover: ✅ The biggest challenges of switching careers as an immigrant ✅ The exact 3 steps that helped Monica become a successful accountant ✅ How YOU can start your journey—even with no U.S. experience! Join the EXACT course Monica enrolled in: https://controller-academy.com/courses/controller-academy Time Stamps: 00:00 Intro 00:47 Monica's Background 01:47 Monica's Job Responsibilities 02:56 Monica's Goal in 5 Years 04:47 Monica's Learned This From My Course 06:08 Monica's fav TV Show & Music 08:42 Monica's Journey To the US ----------------------------------- Hang Out with me on social media: 📸 https://www.instagram.com/the_financial_controller/ 📱https://www.tiktok.com/@thefinancialcontroller https://www.linkedin.com/in/bill-hanna-cpa-7653a851/ DISCLAIMER: Links included in this description might be affiliate links. If you happen to purchase a product or service with the links that I provide I may receive a small commission. There is no additional charge to you! Thank you for supporting my channel so I can continue to provide you with free content each week! All views expressed on my channel are mine alone. Not intended as financial or professional advice