Intense, real-world, memorable - gamified simulation training
Intense, real-world, memorable - gamified simulation training
In this Interest Rate Risk Simulation, participants are making critical decisions to protect financial institutions from the volatility of changing interest rates while balancing profitability, regulatory demands, and stakeholder expectations.
Interest Rate Risk identification and measurement
Asset-Liability Management frameworks and committee governance
The yield curve and its implications for banking strategy
Hedging strategies using swaps, futures, and options
Capital and liquidity requirements under Basel regulations
Funds Transfer Pricing and its role in performance management
Impact of central bank monetary policy on banking operations
Stress testing and scenario analysis for interest rate shocks
Behavioral modeling of non-maturity deposits
Strategic balance sheet restructuring
In the simulation, participants will:
Analyze the current interest rate risk exposure and balance sheet composition.
Decide on new loan pricing, deposit campaigns, and funding strategies.
Select and execute hedging transactions to manage identified gaps.
Respond to economic updates, regulatory changes, and competitive pressures.
Present their quarterly ALM strategy and performance to the board.
Reflect on the outcomes of their decisions and adapt strategies for the next period.
Understand the primary sources and types of interest rate risk in banking.
Apply key metrics like Gap and Duration to quantify risk exposure.
Formulate strategic ALM decisions to align with the bank's risk appetite.
Evaluate and execute appropriate hedging strategies using derivatives.
Interpret the impact of monetary policy and yield curve shifts.
Integrate regulatory capital and liquidity considerations into treasury decisions.
Communicate risk positions and management strategies effectively to stakeholders.
Develop confidence in making high-stakes financial decisions under uncertainty.
1. Receive the Economic and Bank Brief Teams review their bank's starting balance sheet, the economic outlook, and the competitive landscape.
** 2. Analyze the Risk Position** They calculate key risk metrics, identify vulnerabilities, and forecast the impact of potential rate changes.
3. Make Strategic Decisions Teams decide on commercial strategies (loans/deposits) and execute hedging trades in the derivatives market.
4. Collaborate and Negotiate Teams may act as different banks competing for market share or as different departments within one bank.
5. View Results and Market Update The simulation engine processes all decisions, generating new financial statements and a market update for the next round.
6. Review and Adapt Teams see their performance via dashboards (NII, EVE, capital ratios) and must refine their strategy over multiple rounds.
Who is this interest rate risk simulation designed for? It's designed for finance students, early-career bankers, treasury professionals, and anyone seeking to understand the practical management of a bank's balance sheet and interest rate exposure.
How long does the simulation take to complete? A standard run is 3-4 hours, which can be delivered in one session or split across multiple modules to fit academic schedules or training programs.
Is this an individual or team-based activity? It is designed for teams (typically 3-5 participants) to encourage discussion, debate, and collaborative decision-making, mirroring real ALM committee dynamics.
Does it use real data? Yes. The simulation uses realistic economic scenarios, yield curve data, and banking dynamics modeled on real-world financial environments to ensure authenticity.
Can the simulation be customized for our specific training needs? Absolutely. Instructors can tailor parameters such as the initial balance sheet, the intensity of rate shocks, the available hedging instruments, and the regulatory framework.
What specific instruments can participants trade? Participants can use a range of derivatives to hedge their risk, including interest rate swaps, futures, and options, learning the practical application of each.
How does this simulation help with career preparation? It provides direct, resume-relevant experience for roles in corporate treasury, bank ALM, risk management, fixed income, and financial consulting, bridging the gap between theory and practice.
Financial Performance (Net Interest Income stability, Economic Value of Equity)
Risk Management Effectiveness (reduction in earnings and value-at-risk)
Quality of Hedging Strategy and cost-effectiveness of derivative usage
Adherence to Regulatory Capital and Liquidity Ratios
Strategic Communication of decisions in debrief presentations
Join this 20-minute webinar, followed by a Q&A session, to immerse yourself in the simulation.
or
Book a 15-minute Zoom demo with one of our experts to explore how the simulation can benefit you.
