Yesterday (1/7/10) the FFIEC issued and advisory bulletin that indicates the increased expectations regulators have when reviewing the interest rate risk process. (For a copy of this advisory click here)
You are all aware that we have promoted the use of FARIN Foresight and SAM over the years as a tool that should be used dynamically to assess risk. We have always advocated this approach as a “Best in Class” approach but have never had the backing of the regulators to force the issue. It looks like that time has come. All federally insured institutions are being notified that the well managed designation will include more rigorous evaluation of risk, including value at risk, non-parallel rate movements, 2-3 year forecast horizons and more.
Having already made the investment in a tool that can provide these results gets you well along the way to meeting requirements. Now we need to add in the missing parts. For some there are more parts to add than others. Nonetheless, we can help. We are offering each month a set of 2 ½ day workshops here in Madison at a very low cost of $995 per institution (2 people maximum) to get you moving toward full compliance with the new expectations.
The new focus of regulators will be on the inclusion of more rate forecasts, extended time horizons, effective policies and controls, and meaningful reporting of risks. We will attack these areas in the session on an individual basis. Space is limited to ensure individual attention. Call Chris Acker today for more information. (800.236.3724 x 4241)
By the way…If you have not yet signed up for the Global Insight interest rate forecast service, we would suggest that this is a great time to do so. This service ($1,200 per year) provides you with monthly updates to the economic forecasts, complete with 5 year interest rate forecasts for base case, high and low that looks at changing yield curve slopes and basis risks from an economic perspective.
