Important Points for IC 99 - Asset Management Exam
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Asset Liability Management (ALM) is a process and practice which enable us to understand and assess whether the enterprises assets would be sufficient to meet its liabilities arising or happening in the future from all the existing funds used in business.
The risk of counter party failure in meeting the payment obligation on the specific date is known as credit risk.
ALCO is the top most committee of a bank is required to oversee the implementation of ALM system in bank. ALCO is to be headed by CMD / ED of bank as per regulatory requirement.
Standard 13 describes and emphasises best practices for asset-liability management (ALM) that all insurers are required to follow. This standard also specifies 11 basic requirements for their sound system of ALM in insurance business both; life and non-life.
Asset liability management provides financial institutions in particular a comprehensive and dynamic framework for measuring; monitoring and managing the financial risks associated with investment strategies and functions keeping in view with changing interest rates, foreign exchange rates and default risks that can affect their return and liquidity.
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