Interest Rate Risk Management

Interest rate risk management involves strategies to minimize the potential negative impact of fluctuating interest rates on an organization’s finances. When rates change, it can affect borrowing costs, investment returns, and overall profitability. Companies use various tools, such as fixed-rate loans or interest rate swaps, to stabilize cash flows and protect against unexpected rate increases or decreases. Effective management ensures that an organization remains financially healthy and can meet its obligations, even when market conditions shift. It’s a crucial aspect of broader financial risk management aimed at ensuring long-term stability.