Three Steps to Managing Risk in a High-Interest Rate Environment
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Publication Date:
February 27, 2023
Against a backdrop of rising price pressures and consequently higher interest rates, firms must adequately incorporate inflation and interest rate risk into their operations, costs, and portfolios. We suggest three steps to identify, test, and then mitigate risks that high and potentially sustained interest rates present: 1) conduct breakeven stress tests, 2) identify top risks and exercise due diligence, and 3) set up a continuous monitoring routine. Interest rates may come down eventually, but vigilance should be an integral aspect of business operations.
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