Asset and Liability Management has become a risk management technique designed to earn adequate returns while maintaining a comfortable level of liquidity. It takes into consideration interest rates, earning power and degree of willingness to take on debt. All financial institutions today can no longer ignore it, especially in the face of the current financial restructuring.
The scope of ALM activities has expanded greatly. Today, ALM departments are addressing (non-trading) foreign exchange risk and other risks; the liquidity profitability dilemma that bankers face could be better resolved through a sound knowledge and practice of ALM- the scope of which has now widened to include the management of various risks to maintain and possibly, enhance yield.
Modern techniques that are now applied in ALM involve an integrated approach to enterprise risk management because of the inter-relatedness of the different risks. It is therefore in a bid to expose participants to the innovative and creative techniques of managing assets and liabilities in a financial institution’s balance sheet that the FMDA has designed this ALM programme as a strategic management tool.
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