BancPro & Associates
INTEREST RATE RISK
The OCC and NCUA have been very active in requiring a more robust asset/liability management and IRR process. This broadly defined principle includes rate shocks, economic value of equity, liquidity, contingency funding plans, backtesting, forecasting, etc. Specifically, the Board of Directors needs to have more than a casual knowledge of this important topic. The Board has the ultimate responsibility in providing direction as to the institution's risk profile and risk tolerance, given the nature and complexity of the balance sheet.
The services we provide include third party independent reviews, Board education and general assistance to the institution to ensure policies and procedures are in compliance with what the regulators are looking for. Terms like deposit studies, decay rates, beta factors and lags are important, yet not always understood.
The OCC and NCUA have been very active of late in requiring a more robust asset/liability management and IRR process. This broadly defined principal includes rate shocks, economic value of equity, liquidity, contingency funding plans, backtesting, forecast, etc.Particularly Boards need to have more than a casual knowledge of this important topic. The Board has the ultimate responsibility in providing direction as to the risk profile and risk tolerance., given the nature and complexity of the institution's balance sheet.
It's getting harder to balance risk vs. reward