Explore commonly used personal finance terms.
Asset-Liability Management (ALM) is a financial strategy used by institutions to manage risks associated with mismatches between their assets and liabilities. It aims to ensure that assets are allocated in a way that meets liabilities as they come due, balancing liquidity needs, profitability, and risk exposure. Banks, insurers, and pension funds use ALM to minimize risks such as interest rate and liquidity risk. Effective ALM ensures the institution has adequate resources to cover obligations while optimizing financial returns.
