Interest Rate Risk

IRR is one of seven risks that provide the foundation for the NCUA’s risk-focused exams. IRR may arise in various forms and can quickly impact a credit union’s earnings and net worth. IRR is inherent in a variety of transactions and the degree of its impact is driven by changes in market rates.

Credit union staff responsible for modeling IRR should evaluate the impact of the change in interest rates on current holdings, the validity of the underlying assumptions, and use appropriate macroeconomic scenarios to model IRR exposures.

This section covers the following topics:

• How Interest Rate Risk Impacts a Credit Union’s Financial Position

• Types of Interest Rate Risk

• Sources of Interest Rate Risk

Last updated on December 06, 2024