Asset-liability management

Asset-liability management compares the amount, timing, currency and repricing characteristics of assets and liabilities. A business may align foreign-currency receivables with borrowing in the same currency or manage interest-rate gaps between assets and funding. The matching can reduce a particular exposure, but creates other considerations such as credit, liquidity, basis and refinancing risk. Legal availability, actual payment dates and costs matter. ALM is not simply the maintenance of physical assets or a guarantee that all risks disappear when nominal amounts are equal.