What is Interest Rate Risk?
Interest Rate Risk The risk that changes in market interest rates will adversely affect a bank’s earnings or the economic value of its assets and liabilities. It is a core element of bank risk management under Basel and regulatory frameworks.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Interest Rate Risk” Used in Practice?
Banks must regularly assess interest rate risk exposures and report stress-test results to regulators under Basel requirements.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Interest Rate Risk?
The risk that changes in market interest rates will adversely affect a bank’s earnings or the economic value of its assets and liabilities. It is a core element of bank risk management under Basel and regulatory frameworks.
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