Collateral Management is the process of managing assets that are pledged as security for financial transactions. This ensures that both parties in a transaction have sufficient collateral to mitigate risks, particularly in cases of default. It involves monitoring, valuing, and optimizing collateral to meet regulatory requirements and minimize costs. Effective Collateral Management helps financial institutions maintain liquidity and manage credit risk. By efficiently handling collateral, firms can reduce the likelihood of losses and improve their overall financial stability. This practice is essential in various sectors, including banking, derivatives trading, and securities lending.