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Applying IFRS - IASB continues to develop its DRM accounting model
The IASB has completed its initial deliberations on the future Dynamic Risk Management model for banks' portfolios of interest rate risk.
The IASB has sought to align the accounting model with the approach actually used for risk management, so as to limit any inconsistencies between them. In particular, the Dynamic Risk Management (DRM) model has moved away from traditional hedge accounting models that focus on a specific hedged amount, to a risk management strategy that sets out an acceptable range (using risk limits) within which the risk exposure can vary.
It is now possible to understand, at a high level, how the model is expected to work. However, the IASB is still developing other areas of the model as it works towards an Exposure Draft, expected to be published in 2025.