Answer: Asset and liability management (ALM) is a crucial process or strategy that involves effectively managing assets and cash flows to fulfill obligations and minimize risks caused by any mismatch between assets and liabilities. This technique is utilized for financial planning, asset allocation, and regulatory and capital framework adjustments. Additionally, ALM can significantly impact the profitability, efficiency, and indexation of organizations or funds. Essentially, ALM is a risk management approach that helps financial institutions minimize risk and maximize profits by managing their assets and liabilities. It guarantees that the institution has sufficient cash readily available to meet its obligations as they arise.
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