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Asset Liability Model Validation

Asset liability (A-L) model validation is an essential component of credit union risk management and reporting. It is an evaluation process in which every aspect of a credit union’s A-L model is compared against current methodology, described as “best practices.” The information gained from validation helps credit unions determine if their A-L process is adequately capturing the full measure of Interest Rate Risk (IRR) on the balance sheet. If true risk is not measured against an appropriate model, decision-making regarding risk will suffer, as will performance.

A-L model validation assures credit union CEOs, CFOs, asset liability committee (ALCO) members, and other credit union leaders that the IRR measurement process accurately displays the IRR exposure of their credit union. It enables them to identify where investment IRR measurements may not fully capture true risk. These areas include modeling assumptions, account setup, and reporting practices. In addition, validation ensures compliance with NCUA and other financial institution regulations.

How will QuantyPhi help your credit union?

QuantyPhi’s goal is to help you evaluate the IRR on your balance sheet and provide you with insights on how to improve your credit union’s performance and pass your exams with ease and confidence.

Our asset liability experts will review critical areas of interest rate risk measurement and management, including:

  1. ALM program governance and controls
  2. Interest Rate Risk (IRR) policy review
  3. Data extraction, import, and reconciliation procedures
  4. Model results validation
  5. ALM assumptions review
  6. Compliance with regulations, policies, and best practices

By using powerful state-of-the-art technology, our highly-trained analysts will review your credit union’s IRR process, pinpoint areas that are not currently optimized for overall peak performance, suggest methods and practices to help improve your credit union’s asset liability management process, and help you implement any desired changes.