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Asset-Liability Committee (ALCO)

An asset-liability committee (ALCO) is a committee of senior management responsible for managing the assets and liabilities of a financial institution. The ALCO is typically responsible for setting the interest rate risk appetite of the institution, as well as developing and implementing strategies to manage interest rate risk. The ALCO may also be responsible for managing other risks, such as credit risk and liquidity risk.

The ALCO is typically chaired by the chief financial officer (CFO) or the chief risk officer (CRO). Other members of the ALCO may include the chief executive officer (CEO), the chief operating officer (COO), the chief investment officer (CIO), and the chief lending officer (CLO). The ALCO may also include other senior managers from the finance, risk, and operations departments.

The ALCO meets regularly to review the institution's asset and liability positions, as well as the risks associated with these positions. The ALCO uses this information to develop and implement strategies to manage the institution's risks. The ALCO may also make recommendations to the board of directors on matters related to asset and liability management.

The ALCO plays an important role in managing the risks of a financial institution. By regularly reviewing the institution's asset and liability positions, the ALCO can identify and mitigate risks before they become a problem. The ALCO can also help the institution to achieve its financial goals by developing and implementing strategies to manage its risks.

Here are some of the key functions of an ALCO:

The ALCO is an important part of the risk management framework of a financial institution. By regularly reviewing the institution's asset and liability positions, the ALCO can help to identify and mitigate risks before they become a problem. The ALCO can also help the institution to achieve its financial goals by developing and implementing strategies to manage its risks.