Large Bank Examination Workshop February 2026

Exercise: Sources of Model Risk • Make a list of possible sources of model risk. • Try to do this without looking ahead at the next slide!

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Sources of Model Risk

• Inappropriate specification • Incorrect parameter estimates • Flawed hypotheses and/or assumptions • Mathematical computation errors • Inaccurate, inappropriate or incomplete data • Improper or unintended usage • Inadequate monitoring and/or controls

Source: Office of the Superintendent of Financial Institutions (Canada), Enterprise-Wide Model Risk Management for Deposit-Taking Institutions, September 2017.

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