Large Bank Examination Workshop February 2026

Exercise: Effective Governance 1. What are the objectives of good MRM governance?

2. What does a board member or senior manager need to understand about a model in order to participate effectively in MRM?

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Exercise: Model Risk Materiality • Model risk should be managed like other kinds of risk.

• Banks should identify the sources of model risk and assess its likely magnitude for each model in the model inventory.

• What quantitative and qualitative factors should an institution use in assessing model risk materiality?

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