Asset Liability Management (ALM)
Asset and liability management (ALM) is a practice used by financial institutions to mitigate financial risks resulting from a mismatch of assets and liabilities. ALM strategies employ a combination of risk management and financial planning and are often used by organizations to manage long-term risks that can arise due to changing circumstances.
Asset-liability management addresses the protection of both income and capital from interest rate risk, which originates from mismatches in the repricing of assets and liabilities. Interest rate risk management aims to maintain interest rate risk exposures within authorized levels.