Financial services companies rely extensively on models to evaluate and manage risks, fair value assets, and ad hoc analyses for making business decisions. Models have become critical elements to financial institutions’ decision-making processes; therefore, model risk has become a key risk for banks to manage. Therefore, model risk management should be a critical component of a bank’s risk management framework and should be managed similar to other risk types.

Navigant has extensive experience in developing model risk management frameworks to ensure the framework meets regulatory expectations and adds value to the risk management framework. We also have highly experienced professionals who are able to assist in the documentation of your models to address regulatory or validator requirements.

Our comprehensive Model Risk Management services include:

  • Model Risk Management Policy Development - Develop governance policies that provide a framework for model risk management throughout the organization. Provide recommendations to the existing model risk management framework to ensure compliance with appropriate guidelines
  • Conceptual Model Validation - Perform validations of in-house developed or third party vendor models through a process of theory review, code review, bench-marking, document and controls review, and implementation review
  • Modeling Process Validation - Review the model development and execution process from beginning to end, while ensuring the process is compliance with necessary regulations.
  • Documentation & Controls – Develop comprehensive model as well as process documentation that is complaint with all regulatory guidance. Establish controls to ensure regulatory compliance while minimizing human error

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