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Director's Corner

San Francisco Region Director's College Computer- Based Training
Sensitivity to Market Risk

Rating Sensitivity to Market Risk
Answer to the Rating Sensitivity to Market Risk Component of the Training Module:

Examiners rated this bank's sensitivity to market risk component a "2". The use of the word "satisfactory" was a strong hint, but also the examiners noted that exposure to changes in interest rates was moderate and that management was satisfactory. The only concern was the lack of earnings and capital to provide a significant buffer. A downgrade to a "3" is possible if the institution increases the amount of IRR taken without a corresponding increase in capital/earnings, or if IRR management deteriorates and the examiners are no longer confident that the calculated exposure properly depicts the actual exposure.

Now let's move on to the earnings module.

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Last Updated 06/29/2005 Supervision@fdic.gov

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