Does your institution have a contingency process to manage a crisis?
When looking at contingency planning in the ALCO arena, it’s important to keep both liquidity and interest rate risk in mind.
Contingency liquidity planning has certainly come to the forefront for regulators and it is not going away anytime soon. It is no longer enough to simply measure your liquidity needs and forecast sources and uses. You need a strong liquidity management process in place to meet the expectations of today’s regulatory environment.
DCG has created an online liquidity risk management system—Liquidity360°—that provides access to your liquidity management anytime from anywhere. Combining Liquidity360° with the “Wholistic” ALCO approach to balance sheet management provides the process and tools required to satisfy all of your liquidity measurement and management needs.
The other aspect of contingency planning relates to your interest rate risk modeling and reporting process. Do you have the necessary experience and depth of team to sustain your process during these critical times? If there is only a single person running your model internally, what is your plan if that person leaves or deserves a promotion? Having plans in place to deal with this and many other contingencies is a must in today’s banking world.