Is your firm financially resilient and prepared to handle market volatility and client demands? Use this checklist to assess your current Asset Liability Management (ALM) readiness.
Liquidity Management
- Do you maintain an up-to-date liquidity plan that matches cash inflows and outflows?
- Have you identified which assets can be quickly converted to cash during a market event?
- Do you regularly forecast cash needs (e.g., client withdrawals, operational expenses)?
- Is there a contingency funding plan in place for unexpected liquidity shortfalls?
Interest Rate Risk Management
- Have you assessed how interest rate fluctuations impact your assets and liabilities?
- Do you run scenario analyses to understand potential exposure under different rate environments
- Are there policies in place to adjust portfolio allocations in response to interest rate changes?
Stress Testing and Scenario Analysis
- Do you conduct regular stress tests on your balance sheet (e.g., sudden market drops, liquidity shocks)?
- Have you documented contingency plans for adverse scenarios?
- Are the results of stress tests shared with leadership and factored into strategic decisions?
Policy and Governance Framework
- Do you have written ALM policies approved by leadership or the board?
- Is there clear governance over ALM decision-making and oversight?
- Are responsibilities and escalation paths defined and communicated to relevant teams?
- Do you regularly review and update ALM policies to reflect market and regulatory changes?
Monitoring and Reporting
- Are key ALM metrics (e.g., liquidity ratios, cash flow gaps) monitored on an ongoing basis?
- Do you generate periodic ALM reports for leadership review?
- Are you using technology to centralize and automate ALM tracking and reporting?
Final Check
🔲 Have you integrated ALM considerations into your overall risk and compliance framework?
🔲 Do you periodically train your team on ALM processes and policies?
🔲 Are you prepared to demonstrate your ALM approach to clients and regulators if asked?