Institutions must go beyond the abstract and quantify their risk exposure to inform at least a basic hedging strategy. With the right tools and knowledge, any institution can hedge, and this webinar will prove it.
An institution’s decision on how much, where, and when to hedge is a function of the interplay between its assets and liabilities. Financial organizations use asset liability management metrics to measure the nature and extent of interest rate risk on the balance sheet.
Often, these assessments begin with a gap analysis and evolve into net interest income and economic value of equity sensitivities. These metrics are not just for regulatory reporting purposes; they can be used to inform interest rate risk exposure and by extension, critical hedging strategies for the institution.
Once an institution’s risk exposures have been identified and quantified, the next step is to explore hedging strategies and select hedging tools that align with those strategies. Now the organization has a choice: use an over-the-counter (OTC) derivative or an exchange-traded (ET) derivative.
The OTC market has been serving up bespoke hedging instruments for decades, but another option exists for institutions. ET derivatives, aided by changing regulatory and market structures, are a cost-effective and efficient alternative.
This session will explore the basics of interest rate risk measurement and help institutions with hedging concepts and strategies to reduce risk on the balance sheet.
