Regulatory Hot Button - Independent Review of the Interest Rate Risk Management Process

We have been receiving this request from many of our clients about an independent review of the interest rate risk management practices.  We will continue to provide you with the resources you need to continue managing your bank efficiently while keeping regulatory scrutiny at bay.

The 1996 Policy Statement on Interest Rate Risk(IRR) says that banks not only need to measure the risk that changing rates have on earnings and capital, but that the process to measure this risk needs to be reviewed by someone independent of the ALM process. This generally means that ALCO members are not eligible to be reviewers. Additionally, the independent review needs to be more than just a back-test of results and getting the validation certificate from your model provider. The FDIC released a Supervisory Insight in the winter of 2014 addressing how a community bank can address the Independent Review requirement for the IRR management process. The document provides some specific direction has to how to accomplish this with someone within the bank. It does point out that if there isn’t someone that is qualified to perform such a review, then the bank should consider looking to an outside source.  Here is a direct link to the pdf.

Here at AMG, we take pride in the reports that provide our clients. Not only do our reports provide detailed analysis of your balance sheet, the BancPath® report follows what is expected from the 1996 Policy Statement and 2010 Advisory. We even brought a former examiner on staff to keep ahead of the regulatory pressure as it relates to your ALM process. If you are looking for a partner in your ALM process, we are looking forward to be there for you. For more information, call 800-226-1923 or email any of our contacts on the left of this page.