SUPERVISORY GUIDANCE ON MODEL RISK …

1 Federal Deposit Insurance Corporation SUPERVISORY GUIDANCE ON MODEL RISK MANAGEMENT CONTENTS I. II. Purpose and III. Overview of MODEL Risk IV. MODEL Development, Implementation, and V. MODEL VI. Governance, Policies, and VII. I. INTRODUCTION Banks rely heavily on quantitative analysis and models in most aspects of financial decision They routinely use models for a broad range of activities, including underwriting credits; valuing exposures, instruments, and positions; measuring risk; managing and safeguarding client assets; determining capital and reserve adequacy; and many other activities.

Based on supervisory and industry experience over the past several years, this document expands on ... effectiveness since technical knowledge and modeling skills are necessary to conduct appropriate analysis and critique. Finally, challenge may fail to be effective without the influence to ensure that ... essential element is a sound model ...

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  Skills, Model, Guidance, Risks, Essential, Supervisory, Supervisory guidance on model risk

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