Best Practice in Model Risk Management: Modeling Your Models

Over time models have grown in variety, complexity, and use within organizations.  They have moved from tactical pieces of input to a strategic pillar that provides the infrastructure and backbone for strategy and decisions at all levels of the organization. Time and evolution of models left uncontrolled bring forth loss and potential disaster. Unfortunately, many organizations lack governance and architecture for model risk management. Organizations need to provide a structured approach for model risk management that addresses model governance, lifecycle, and architecture to manage models. A best practice is for the organization to leverage Enterprise Architecture and Business Process Modeling Tools to “model” their models.

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