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Question

The Assets Liabilities committee (ALCO) in a bank is primarily responsible for managing which of the following risk?

A Credit Risk Correct Answer Incorrect Answer
B Liquidity Risk Correct Answer Incorrect Answer
C Currency Risk Correct Answer Incorrect Answer
D Operational Risk Correct Answer Incorrect Answer
E Systemic risk Correct Answer Incorrect Answer

Solution

Asset Liability Committee (ALCO) is established to assist and supervise the ALM (Asset Liability Management) unit. It has the central purpose of attaining goals defined by the short- and long-term strategic plans- •    To ensure adequate liquidity while managing the bank's spread between the interest income and interest expense •    To approve a contingency plan •    To review and approve the liquidity and funds management policy at least annually

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