5 Steps to Regain Trust in Your Interest Rate Risk Model

Interest rate risk models have been chewed up and spit out this decade. A record deposit surge, the biggest interest rate shock in 40 years, and massive bank failures hit the industry with a 1-2-3 Black Swan punch.

Deposit volatility ensued along with asset extension, unrealized losses, and quite severe margin pressure. That type of volatility can put a model to the test, and stakeholders have challenged the efficacy of earnings forecasts, budgets, and interest rate risk models.

It’s time to hit the reset button.

Having trust in your model can make a difference in the ALCO strategy discussion by:
Creating well-informed decision-making
Getting stakeholders on the same page
Allowing healthy dissension on ideas, not dismissal of the risk analysis
Letting data lead and intuition follow

I recommend five steps to regain trust in your model.

Gain Assumptions Confidence
Run Static AND Dynamic Models
Simplify the Scenarios
Let Your Balance Sheet Do the Talking
Answer the Question, “So What”?

Read the industry insight

In Depth

Risk Management

5 Steps to Regain Trust in Your Interest Rate Risk Model

In Depth

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