Interest rate risk is a phenomenon that is integral to the nature of banking. It is not always desirable to eliminate this risk, even if it is possible to do so, because banks would be denying themselves opportunities and hampering their ability to handle customer business profitably. This course looks at the structures banks put in place to manage interest rate risk and the various approaches to such management - from 'passive' responses such as the imposition of limit systems to 'active' responses involving hedging rate risk via derivatives.

Prior to completing this course it is recommended you undertake:

  • Interest Rate Risk - Identification & Measurement

This online course forms part of the Intuition short course suite.

Learning objectives

  • Describe how most banks attempt to centralise the process of managing interest rate risk through a treasury function, which adopts both passive and active approaches to handling this risk
  • Outline how derivative instruments are used to hedge interest rate risk


365 Days