The FDIC issued an advisory on January 7, 2010 to remind financial institutions about the need for sound interest rate risk management practices. The advisory discusses that interest rate risk is the exposure of a bank's earnings and capital to adverse interest rate changes. It also outlines various types of interest rate risk including repricing risk, basis risk, yield curve risk, and option risk.

1. FDIC Issues Interest Rate
Risk Advisory
Released January 7, 2010

2. The Need for Sound Interest
Rate Risk Management
Regulators expect each institution to manage its
interest rate risk exposures by using processes and
systems commensurate with its complexity, business
model, risk profile and scope of operations. As such,
the FDIC has issued an Advisory to remind financial
institutions about the need for sound practices in
managing interest rate risk:
http://www.fdic.gov/news/news/press/2010/pr1002.pdf

3. Interest rate risk is the
exposure of a bank’s current or
future earnings and capital to
adverse interest rate changes.

4. Types of Interest Rate Risk
• Repricing Risk
• Basis Risk
• Yield Curve Risk
• Option Risk
• Price Risk

5. Financial Services Consulting
The Financial Services Consulting Division of
Analytic Focus LLC specializes in risk
management, loan re-underwriting and valuation,
information systems, and organizational
development for entities in the financial services
industry. Ira Holt leads the division with more
than 20 years in the banking industry.

6. Analytic Focus LLC
Contact Us
Ira Holt
2344 Valleydale Road
Birmingham, AL 35244
205 / 444-0486
I.Holt@AnalyticFocus.com
www.analyticfocus.com

7. Using Analytic Techniques
To Bring Solutions Into Focus
www.analyticfocus.com