ABSTRACT
The standard accounting schedules that detail the nature of a bank’s assets and liabilities reveal relatively little about the risks that banks are running in their exposure to movements in rates and prices in the international money markets. It is the function of the asset and liability management unit to analyze these hidden exposures and ensure that the level of risk that is being taken is consistent with the profitable survival of the bank. In doing so, they will consider not only the on-balance sheet items but also relevant exposures arising from guarantees, commitments and all activities in off-balance sheet instruments.
