Model Risk Management
Boards and management rely heavily on model output to make strategic and/or operational decisions and it is important to have a proper program in place to ensure accuracy and reliability. Installing a well-developed Model Risk Management program will enable your institution to organize and capture the risks associated with running models and also provide an “effective challenge” environment as prescribed by regulators.
MRM & Governance Development
- Development of fully-integrated model risk management and governance framework
- Building a solid risk management structure to oversee all models and their associated risk is essential to mitigate model risk.
- Deploying effective governance, policies and controls to enhance the program.
Model Inventory & Risk Grading
- Completing a current list of all models and their associated risk rating must be available and accessible to ensure appropriate risk management.
- Establishing a comprehensive process to identify and log new models as they are designed and deployed across the enterprise.
- Designing an effective and intuitive model risk rating system to ensure the most critical and/or complex models receive the appropriate level of attention.
Risk Assessment Process & Utilization
- Developing a risk assessment process to fully capture the extent of all the associated risks a given model may encompass.
- Integrating risk assessments into the risk rating and validation frequency schedule.
Resource Requirements & Deployment
- Assessing the requisite unique skills and resources needed to run a Model Risk Management program that fulfills the specific needs of your institution.
- Providing independent subject matter experts for co-sourced and outsourced model validations.
- Offering independent human resources at any stage of an MRM program, whether in development or in a mature state of existence.