Interest rate risk is risk to the earnings or market value of a portfolio due to uncertain future interest rates. Discussions of interest rate risk can be confusing because there are two fundamentally different ways of approaching the topic. People who are accustomed to one often have difficulty grasping the other. The two perspectives are:

A book value perspective, which perceives risk in terms of its effect on accounting earnings, and

A market value perspective – sometimes called an economic perspective which perceives risk in terms of its effect on the market value of a portfolio.

So – where are your organizational eggs?

On top of that, regulatory guidance requires that your organization include an annual, independent review of your interest rate risk management program.  Rofkahr Consulting can help keep your eggs in the basket and manage your interest rate risk review at the same time.

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