Asset Liability Management Simulation

Students take on the role of financial risk managers, balancing liquidity, interest rate exposure, and profitability to optimize institutional performance under real-world pressures with our asset liability management simulator.

Asset Liability Management Simulation Overview

The Asset Liability Management (ALM) Simulation immerses students in the complex world of financial balance sheet strategy. Students act as risk managers or treasury professionals for a financial institution, responsible for optimizing profitability while managing liquidity, interest rate exposure, and regulatory constraints. Every decision impacts both sides of the balance sheet, requiring a strategic, forward-looking approach.

This ALM simulation challenges students to respond to macroeconomic changes, forecast interest rate movements, and maintain financial stability amid shifting funding needs and investment opportunities. By balancing risk and return in real time, learners gain a deep understanding of the core mechanics that drive financial institutions and the tools they use to maintain solvency and competitiveness.

Asset Liability Management Concepts

Interest Rate Risk Management
Liquidity Management
Duration and Convexity Analysis
Regulatory Capital Requirements (e.g., Basel III)
Gap Analysis and Repricing Risk
Funding Strategy and Cost of Funds
Investment Portfolio Construction
Net Interest Margin Optimization
Scenario and Stress Testing
Economic Value of Equity (EVE) Modeling
Behavioural Assumptions in ALM
Strategic Balance Sheet Planning

Gameflow

What Students Do

During the asset liability management simulation, students engage in the following tasks to develop and apply fintech skills:

Balance Liquidity and Profitability: Adjust asset and liability strategies to optimize returns while ensuring liquidity.
Manage Interest Rate Risk: Use gap analysis and duration tools to reduce exposure to rate shifts.
Construct Investment Portfolios: Select assets to balance yield, maturity, and capital preservation.
Develop Funding Strategies: Evaluate wholesale, retail, and market-based funding options.
Forecast Balance Sheet Changes: Simulate how macroeconomic trends affect assets, liabilities, and capital ratios.
Conduct Stress Testing: Test the resilience of the institution under adverse interest rate and liquidity shocks.
Optimize Net Interest Margin (NIM): Manage pricing, funding, and reinvestment to enhance NIM.
Respond to Regulatory Events: Adjust strategy in response to capital adequacy or liquidity coverage rules.
Present ALM Reports: Communicate balance sheet risks and opportunities to internal stakeholders.
Align ALM with Strategy: Integrate ALM decisions with long-term business planning.

What Students Learn

Balance Sheet Management: Understand how to strategically manage assets and liabilities.
Interest Rate Risk Analysis: Apply tools like duration, convexity, and gap analysis in decision-making.
Liquidity Risk Mitigation: Learn how to monitor and manage funding and cash flow needs.
Scenario Planning: Use stress testing to evaluate the impact of market events on financial health.
Capital Adequacy Insight: Gain familiarity with regulatory capital standards and buffers.
Portfolio Construction: Build asset portfolios that reflect liability duration and risk appetite.
Behavioral Assumption Modeling: Account for customer behavior in asset and liability forecasting.
Financial Communication: Develop skills in presenting complex ALM data to stakeholders.
Strategic Decision-Making: Link short-term tactics with long-term financial strategy.
Regulatory Awareness: Understand how global frameworks like Basel III shape ALM decisions.

Why The Asset Liability Management Simulation Works

The Asset Liability Management Simulation delivers a practical and engaging experience in managing financial institutions’ most critical strategic challenge: maintaining stability and profitability under risk. It challenges students to make complex trade-offs between liquidity, profitability, capital adequacy, and risk - all while reacting to unpredictable economic and regulatory changes. The result is a more sophisticated understanding of how treasury and risk teams operate in the real world.

Because ALM sits at the intersection of finance, risk, and regulation, the asset liability management simulation is uniquely suited to building integrated thinking across disciplines. It gives students firsthand experience with tools and frameworks used by global banks and insurers, making it ideal preparation for roles in treasury, risk management, and financial strategy.

Frequently Asked Questions

Who should take this asset liability management simulation? It’s ideal for students interested in banking, risk management, insurance, treasury, and regulatory finance careers.

Is prior ALM knowledge required? No, but familiarity with basic finance and balance sheet concepts will be helpful. Introductory materials are included.

How long does the asset liability management simulation last? The full experience typically runs 6–8 hours but can be split into shorter modules.

Is this asset liability management simulation based on real data? It uses a blend of real-world financial assumptions and dynamic, scenario-based modeling.

Do students work in teams? Yes, the asset liability management simulation supports both team-based and individual decision-making formats.

What financial instruments are included? The asset liability management simulation includes loans, securities, deposits, wholesale funding, and derivatives.

What kinds of scenarios are simulated? Interest rate shifts, funding pressure, regulatory change, and macroeconomic stress events.

How is performance evaluated? Based on risk-adjusted return, regulatory compliance, liquidity health, and strategic alignment.

Can instructors customize it? Yes, instructors can adjust scenarios, metrics, and learning emphasis.

What careers does this support? The asset liability management simulation prepares students for roles in treasury, asset management, banking, insurance, and regulatory strategy.