By: Joel Pruis
I have just completed the first of two presentations on Model Risk Governance at the RMA Annual Conference. The focus of the presentation was the compliance with the Model Risk Governance guidance at the smaller asset sized financial institutions. The big theme across all of the attendees at the first session was the need for resources to execute on the Model Risk Governance. Such resources are scarce at the smaller asset sized institutions forcing the need and use for external vendors to assist in the development and ongoing validation of any models in use.
With that said, the one area that cannot be outsourced is the model risk governance responsibility of the financial institution. While resources are few, we have to look for existing roles within the organization to support the model risk governance such as:
– Internal Audit – reviewing process, inputs, consistency
– Loan Review – accuracy, consistency, thresholds, etc.
– Compliance – Data usage, pricing consistency, etc.
Start gathering your governance team at your organization and begin the effort around model risk governance!
Discover how an Experian business consultant can help with your Model Risk Governance strategies and processes. Also, if you are interested in gaining deeper insight on regulations affecting financial institutions and how to prepare your business, download Experian’s Compliance as a Differentiator perspective paper.