Asset-liability matching (ALM), also known as liability-driven investing (LDI), is a risk management strategy commonly used by institutional investors, such as pension funds, insurance companies, and endowments, to align the duration and cash flow characteristics of their assets with their liabilities. The primary goal of ALM is to ensure that the investment portfolio can meet future obligations, such as pension payments or insurance claims, in a timely manner while minimising the risk of funding shortfalls.

Hedging is a risk management strategy used to offset or reduce the risk of adverse price movements in an asset or investment. It involves taking a position in a related or correlated asset or financial instrument that moves in the opposite direction to the asset being hedged. The goal of hedging is to protect against potential losses while preserving the opportunity for gains.