Model Risk Management Review Process Automation

Model Risk Management Review Process Automation

Recognizing typical model review activities, identifying design patterns, and creating automated processes

Client: Commercial Lending Institution

Challenge: Our client’s Model Risk Management and Review activity requires adhering to standard operation procedures for each developed model and model application in use. A precise Implementation, Methodology or Integrated Review Plan is developed based on each model’s risk tier. Typical activities include model registration, workflow planning, scoping, document collection, periodic reviews, and identifying issues, assumptions, and model limitations. Versioning, model complexity, incomplete documentation, and siloed communication make the process complex.

FI Solution: After conducting an “as-is” assessment of Fannie’s MRM review and validation process, FI proposed and reengineered an information management solution based on a web-based framework with user interfaces for information management, review activity tracking, and analytical reporting.

FI Impact: FI’s solution frees up 25% of validators’ time to focus on technical reviews and model risk. APIs read real time system data for automated template creation, consistency, and data accuracy. Open-source technology augments current legacy capabilities to improve process transparency, provide deeper analytics, and create flexible infrastructure for expansion and continued automation.