Asset liability management is the process of managing the use of assets and cash flows to meet a company's obligations in order to reduce the firm’s risk. If assets and liabilities are properly handled, the business can increase profits. This eSchool will increase knowledge and improve performance...
Asset liability management is the process of managing the use of assets and cash flows to meet a company's obligations in order to reduce the firm’s risk. If assets and liabilities are properly handled, the business can increase profits. This eSchool will increase knowledge and improve performance as a result of the five training sessions that slowly build off of each other. Followed up by a session connecting asset liability management and enterprise risk management.
This event is endorsed by the CUNA Finance Council.
Who Should Attend
This eSchool is beneficial for those that must manage risk at a credit union such as, finance analyst, finance manager and risk vice president.
Reward, Risk, and ALM
December 9, 2019 // 10:00-11:00 a.m. CT
This session will begin with a review of the foundation of the business of banking (how CUs make money). Attendees will learn the risks associated with asset/liability management (ALM) and how ALM fits in. The discussion of ALM covers the role it should play in the institution as well as the associated risks. In this session, you will learn:
- The importance of ALM to safety and soundness
- ALM vs AL compliance
- Overview and core functions of financial institutions
- Reward of ALM
- Risk of ALM
- ALM objectives and vulnerabilities
Measuring Risk and Measuring Reward
December 10, 2019 // 10:00-11:00 a.m. CT
Taking a close look at the general principles of cash flows. Attendees will then learn about the different types of existing analytical frameworks commonly used to evaluate cash flows—and the limitations of each. In this session, you will learn:
- Cash flows
- Static gap
- Measuring reward (income sensitivity)
- Measuring risk (net economic value)
- Vulnerabilities with the traditional decision-making process.
Measuring Risk versus Reward
December 11, 2019 // 10:00-11:00 a.m. CT
During this session you'll break down total return and evaluate the trade-off between risk and reward through discussion and review of a case study. You will also walk through an example of liquidity. In this session, you will learn:
- Incomplete tools and misunderstood terms
- The problem with yield and duration
- Establishing a common denominator
- Total return scenario analysis
- The marriage of income and economic value simulations.
The Importance of Assumptions
December 12, 2019 // 10:00-11:00 a.m. CT
Having learned the conventional analytical frameworks, attendees turn to assumptions and how they factor in to the evaluation of assets, liabilities and off-balance-sheet instruments. In this session, you will learn about:
- Non-maturity deposits
- Reinvestment rates
- Prepayment speeds
- Early redemptions
- Static balance sheet
- Interest rate changes (timing and magnitude)
- Discounting cash flows (curves and spreads)
Changing the Risk-Reward Profile
December 13, 2019 // 10:00-11:00 a.m. CT
The program culminates with the optimal decision-making framework for institutions and lays it out in real-world context. Along with the impact this framework would have for the various stakeholders of an institution. In this session, you will learn about:
- Board oversight
- Stakeholder tensions
- Case study
- Course takeaways
Integrating ALM into Enterprise Risk Management (ERM)
December 16, 2019 // 10:00-11:00 a.m. CT
Once you're armed with an understanding of ALM, you'll want to take it a step further. During this session, we will explore how ALM fits within the broader perspective of Enterprise Risk Management (ERM). Attendees will learn how to use ALM to balance and align risk-taking activity across the credit union. We will also discuss how ALM information can be used to inform the ERM process, and how ERM intelligence can improve the effectiveness of ALM.
Recorded eSchool length: 6 hours
This eSchool is available to CUNA Training Bundle users at no additional cost.