See earnings at risk, market value at risk and market value of portfolio equity. However, in practice, the term is often used to refer to segments of that broader definition such as only interest rate risk management or only interest rate and liquidity risk management. Therefore, in the broadest sense of the term, ALM is simply the harmonious management of cash, loans, investments, fixed assets, deposits, short-term borrowings, long-term borrowings, capital, and off-balance sheet commitments. Accomplishing that task requires coordinated management of assets, liabilities, capital, and off-balance sheet positions. The process of balancing the management of separate types of financial risk to achieve desired objectives while operating within predetermined, prudent risk limits. Asset/liability management (ALM) Coordinated management of all of the financial risks inherent in the business conducted by a financial institution.
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