Large Bank Examination Workshop February 2026

Model Governance: 2011 Model Risk Management Guidance 1. Model Development, Implementation, and Use: Banks should ensure robust processes for developing, implementing, and using models. This includes clear documentation, appropriate testing, and ongoing monitoring to ensure models perform as expected. 2. Model Validation: Effective validation is crucial. Banks must regularly validate their models to confirm they are accurate and reliable. This involves independent reviews, back-testing, and benchmarking against other models or data.

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Model Governance: 2011 Model Risk Management Guidance

3. Governance, Policies, and Controls: Strong governance frameworks are essential. Banks should establish policies and controls to manage model risk, including defining roles and responsibilities, setting risk limits, and ensuring senior management oversight. 4. Risk Management Framework: Model risk should be managed like other types of risk. Banks need to identify sources of model risk, assess its magnitude, and implement a framework to manage it appropriately.

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