What is Asset Liability Management?

Legal Definition
Initially pioneered by financial institutions during the 1970s as interest rates became increasingly volatile, asset and liability management (often abbreviated ALM) is the practice of managing risks that arise due to mismatches between the assets and liabilities.

The process is at the crossroads between risk management and strategic planning. It is not just about offering solutions to mitigate or hedge the risks arising from the interaction of assets and liabilities but is focused on a long-term perspective: success in the process of maximising assets to meet complex liabilities may increase profitability.

Thus modern ALM includes the allocation and management of assets, equity, interest rate and credit risk management including risk overlays, and the calibration of firmwide tools within these risk frameworks for optimisation and management in the local regulatory and capital environment.

Often an ALM approach passively matches assets against liabilities (fully hedged) and leaves surplus to be actively managed.
-- Wikipedia
Legal Definition
Managing risk by earning profit with extra assets to cover any liability. This is done to balance earning power as collateral, interest rate, and debt levels that are safe.
Legal Definition
A business and RISK MANAGEMENT practice where BANKS and SECURITIES FIRMS manage the CASH FLOWS generated by ASSETS (e.g., LOANS, REVERSE REPURCHASE AGREEMENTS, investments), LIABILITIES (e.g., DEPOSITS, REPURCHASE AGREEMENTS), and OFFBALANCE SHEET ACTIVITIES (e.g., DERIVATIVES, REVOLVING CREDIT AGREEMENTS, GUARANTEES). Depending on a bank