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Earnings at risk
Published: 13th February 2010 by William Webster
Earnings at risk (EAR) is a risk management tool that's used by banks and mutual firms to manage the risks associated with Net Interest Income, (NII). It's used more by management than dealers for reasons that may become apparent.
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Related Documents
Training Courses > Value at Risk 
Training Courses > Balance Sheet Risk Management 
Regulation > Does liquidity risk overshadow market risk?
23rd January 2010
In a world where regulators are focusing on liquidity and capital it's easy to overlook market risk. In many firms this means interest rate exposure. In the UK with Bank Rate at an all time low it's tempting to think that hedging fixed rate assets is just a waste of money. After all why pay 3.25% on a 5 year swap when 3 month Libor is only 51 basis points? Surely matching the interest basis on assets and liabilities ends up costing you 274 bps doesn't it?
