ALM

ALM, or Asset Liability Management, is a strategic approach used by financial institutions to manage risks that arise from the mismatch between assets (what they own) and liabilities (what they owe). It involves analyzing and balancing the timing and amounts of cash flows to ensure that the institution can meet its obligations while maximizing returns on its assets. Essentially, ALM helps organizations maintain financial stability by making informed decisions about investments and funding, thereby mitigating risks related to interest rates, liquidity, and economic changes.