RMA launches Model Risk Framework for Medium-Size and Small Banks

19-11-2020

The Risk Management Association’s (RMA) Model Validation Consortium (MVC) has created a resource for small and medium-size banks that want to fully capitalise on the benefits of models while also managing models’ considerable risks.

RMA’s Model Risk Framework for Medium-Size and Small Banks details the key components of a sound model risk management (MRM) framework, with a focus on institutions where the struggles to launch a solid MRM program are distinct from those of a national or multinational bank.

The Framework is a guide to developing a model inventory; the model development process; model validation; running an ongoing model monitoring program; and creating a risk appetite statement.

“The Framework provides checklists, questions to ask throughout the process, and information on MRM roles and responsibilities at a financial institution,” said RMA director of credit risk Fran Garritt. “It is a valuable and convenient guide to not only starting up an MRM program but ensuring its continued success as well.”

Steven Martin, RMA’s director of business solutions added: “RMA is pleased to provide a resource that will help more members tap the power of models while also mitigating their risk. RMA’s Model Risk Framework for Medium-Size and Small Banks is key to developing a sound, cost-efficient MRM framework that is appropriately scaled for the institution.”

RMA, Risk Management, Insurance, Reinsurance, Fran Garritt, North America

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