Professional Documents
Culture Documents
Risk
Management in
Financial
Institutions
Chapter Preview
We examine how financial institutions
manage credit risk, default risk, etc. We
explore the tools available to managers to
measure these risks and strategies to
reduce them. Topics include:
Managing Credit Risk
Managing Interest-Rate Risk
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RSA $32m
Rate-Sensitive Liabs
RSL $49.5m
if i 5%
Asset Income
Liability Costs
Income
5% $32.0m
5% $49.5m
$1.6m $ 2.5
$ 1.6m
$ 2.5m
$ 0.9m
Estimate of % of checkable
deposits and savings
accounts that will
experience rate change
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Duration of First
National Bank's
Assets and
Liabilities
or:
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Net Worth:
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Chapter Summary
Managing Credit Risk: basic techniques for
managing relationships and rationing credit
were reviewed.
Managing Interest-Rate Risk: the essential
techniques of measuring interest-rate risk
for both income and capital affects were
presented.
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