Passive Mitigation Strategies

Passive mitigation strategies include reinvesting regularly scheduled cash flows from loan amortizations and investment maturities into shorter-term loans and investments (including variable-rate instruments). These strategies are intended to reduce the overall IRR exposure periodically (for example, quarterly). Passive strategies are more appropriate when a credit union has a demonstrably strong risk management platform, understands its risk exposures, and has a clear alternative strategy if the urgency of its risk exposure increases significantly before the passive approach has succeeded.

Last updated on December 06, 2024