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The Federal Financial Institutions Examination Council on Thursday released a FAQ document that responds to common questions about last year's advisory on interest-rate risk management.

The FAQ document is being adopted by NCUA, the Office of the Comptroller of the Currency, the Federal Reserve, the FDIC and the State Liaison Committee. It notes the regulators expectation that all financial institutions manage their interest risk exposures with processes and systems commensurate with their complexity, risk profiles, scope of operations and capital levels.

The document addresses several issues related to interest-rate risk, including appropriate measurement and reporting of risks, robust and meaningful stress testing, assumption development reflecting the institution's experience and comprehensive model validation.

Management staff at financial institutions are responsible for ensuring that the capabilities of their risk management processes match the risks undertaken by the institution, the document maintains. The FAQ document discusses types of methodologies for measuring interest-rate risk, stress testing and more.