The convergence of ALM and ERM

Banks seeking a truly complete view of their exposures are beginning to seek ways to integrate the enterprise risk management systems they use for their trading books with the asset and liability management systems they use for their banking books. Clive Davidson examines the rationale for this and the challenges that need to be overcome

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The past decade has seen financial institutions make great strides in managing the risk of their trading books, implementing sophisticated systems that enable them to measure their market exposures. Meanwhile, similar strides have been made for the banking book, with the use of asset and liability management (ALM) systems to monitor interest rate and other risks. But to make strategic financial decisions concerning the direction of the business and the allocation of capital, institutions

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