c. myblog

March 3, 2016

c. notes – Aggregating Risks to Inform Strategy

To remain successful as the world changes and becomes more complex, risk management processes must keep pace. Risk management begins with identifying and quantifying strategic risks. An effective process also recognizes that it is not adequate to only quantify and understand risks in silos. Risks should also be quantified and understood in aggregate. As history […]

January 28, 2016

Interest Rate Risk Policy Limits: One Big Misconception

We often see interest rate risk policy limits that rely too much on net interest income (NII) volatility and miss the absolute bottom-line exposure. Such reliance can cause boards and managements to unintentionally take on more risk than they intended. Why? Because these types of policy limits ignore strategy levers below the margin. Establishing risk […]

December 3, 2015

If You Think Changes in Payments Won’t Impact Your ALM and Interest Rate Risk Management―Think Again

There are bites – small and LARGE – being taken out of credit unions’ non-interest income. Just consider: PINless PIN. Apple Pay – or the pay option du jour (e.g., Bitcoin, Samsung Pay, etc.). The increase in payments via ACH, including P2P. The decline in ODP. As these bites are being taken out of revenue, decisions […]

August 27, 2015

Model Risk Management

Model risk involves the use of financial models, and the potential that errors in setup, input, or interpretation of results can lead to material misstatement of results. Model risk can be present in internally created financial models or in vendor-supplied financial models and/or results. Having a model’s mathematics validated periodically (important only if there is […]

August 6, 2015

Forward Curve Back Testing

Our last blog, NEV Does Not Equal NII, drew questions from some of our readers. Specifically, some questioned our comment about a forward curve’s inability to predict interest rates. This is fair, since some in the industry seem to treat it as a foregone conclusion that a forward curve will come true. We hear a […]

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