Earnings at Risk

Earnings at Risk is a powerful Asset Liability Management (ALM) tool that measures short-term interest rate risk for various rate assumptions.

Typical focus is over a 12 to 24-month time horizon. It focuses on how interest rate fluctuations impact your financial institution's net interest income. The results contain your forecasting assumptions to measure how much interest rate risk your forecast contains.

Here are examples of how to use Earnings at Risk results:

• Perform rate scenario shocks on existing forecasts and measure financial results.
• Compare results to policy guidelines to identify areas of risk.
• Model forecast strategies and monitor the impact of potential interest rate risk.

The Earnings at Risk workflow is distributed across four tabs:

Results

This tab lets you review results from the last Earnings at Risk calculation.

Validation

This tab lets you review warnings regarding reconciliation and forecasting data.

Manage Scenarios

This tab lets you view existing scenarios and create configurable, reusable, and non-parallel rate scenarios.

Column Setup

This tab lets you specify the values to appear in the Results tab and in reports.