ALCO Action

Download PDF Print Version

When it’s time to put your ALCO decisions into action.

You have assessed your potential risks and looked at various alternatives to help you manage those risks. Decisions have been made and it’s time to take action.

DCG can help you assess risks and take action to implement an effective plan.

Have you:

  • Considered if the strategy you’ve identified is free of unintended bias or transactional risk prepared by someone who stands to benefit from its execution?
  • Outlined who is responsible for executing the transaction and/or putting the new ALCO plan into action?

Clearly identifying roles and responsibilities is a key component of putting ALCO decisions into action. It’s also critical to make sure the board and senior management understand and can explain the action taken. Even if the ALCO action is to maintain a status quo, there should be a documented risk assessment to clearly explain why that is the decision being made.

For years DCG’s use of the “Wholistic” ALCO approach has facilitated decision-making as part of this process. As noted in recent regulatory guidance, taking action is considered a key component in effective balance sheet management.

“…effective IRR management not only involves the identification and measurement of IRR, but also provides for appropriate actions to control this risk.” – Advisory on Interest Rate Risk Management, January 6, 2010