What is Asset-Liability Committee – ALCO?
A risk-management committee in a bank or other lending institution that generally comprises the senior-management levels of the institution. The ALCO’s primary goal is to evaluate, monitor and approve practices relating to risk due to imbalances in the capital structure. Read more for examples and further explanation including related video clips and also comments
Example explains Asset-Liability Committee – ALCO
For example, the ALCO will have responsibility for setting limits on the arbitrage of borrowing in the short-term markets, while lending long-term instruments. Among the factors considered are liquidity risk, interest rate risk, operational risk and external events that may affect the bank’s forecast and strategic balance-sheet allocations. The ALCO will generally report to the board of directors and will also have regulatory reporting responsibilities.
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