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Asset-Liability Management

Asset Liability Management (ALM) is a financial practice that helps organizations, like banks or insurance companies, balance their assets (what they own) with their liabilities (what they owe). The goal of ALM is to manage risks related to interest rates, liquidity, and cash flow to ensure the organization can meet its obligations and financial goals. By analyzing and forecasting financial scenarios, ALM helps institutions optimize profitability while maintaining stability and regulatory compliance, ultimately safeguarding against potential financial issues.

Additional Insights

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    Asset-Liability Management (ALM) is a strategy used by organizations, especially financial institutions, to manage their assets (what they own) and liabilities (what they owe) in a way that balances risk and ensures financial stability. The goal is to optimize the relationship between these two sides to maintain liquidity, meet future obligations, and maximize returns. It involves analyzing interest rates, cash flows, and other financial variables to safeguard against potential risks, such as changes in market conditions or economic downturns, thus ensuring the organization can meet its financial goals without excessive risk.