Large Bank Examination Workshop February 2026

An Emerging Consensus • Supervisory Expectations - Banks are expected to treat model risk as a distinct risk category . Senior management and boards must be actively involved in oversight, ensuring accountability and transparency in model use. • Scope of Application Applies to all banking organizations supervised by the Federal Reserve, OCC, and later adopted by the FDIC to ensure consistency across agencies • Supervisory authorities and the market are moving over time to a consensus on best-practice model risk management. • In this session, we summarize and comment on that emerging consensus in the light of our earlier discussion of practical problems in identifying, analyzing and controlling model risk.

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MRM Participants

• Model user  Relies on the model’s output for making business decisions  May be involved in model development and monitoring, but not as a substitute for independent review • Model developer  Designs, develops, evaluates and documents the model  May also perform ongoing monitoring and outcomes analysis • Model owner  Responsible for model selection, coordinating model development, initial testing, ongoing monitoring, outcomes analysis and

administering changes and documentation  May also be the model developer or user

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