Top 10 op risks 2018: model risk

Model risk re-enters top 10 amid avalanche of validation regulations

Model risk has returned to the top 10 this year, for the first time since 2015 – a reflection of the growing regulatory burdens placed on banks’ modelling and validation teams in a number of key jurisdictions. It also hints at the potential cost of errors should banks make a mistake.

This year saw the European Central Bank roll out the inspection phase of its Targeted Review of Internal Models (Trim), while the US Federal Reserve incorporated model risk governance into the qualitative portion

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