Model risk
Brain drain at OCC raises concerns about US model supervision
Quant team cull will reduce capacity to validate bank models, but that could be part of the plan
Amid tariff turmoil, banks warned not to fudge IFRS 9 overlays
Flip-flopping US policies challenge loan loss provisioning models; EU regulators take watching brief
Trading desks want regulators to face down the NMRF monster
Rule-makers in Australia and the European Union are open to changes to the unpopular FRTB test
DeepSeek success spurs banks to consider do-it-yourself AI
Chinese LLM resets price tag for in-house systems – and could also nudge banks towards open-source models
Top 10 op risks: cyber still top, but change management surges
AI-enhanced threats permeate this year’s top operational risks for financial firms, from infosec to geopolitics
Operational risk, capital regulation and model risk
The author proposes seven basic properties for operational risk modelling to form an operational risk management framework.
How Citi moved GenAI from firm-wide ban to internal roll-out
Bank adopted three specific inward-facing use cases with a unified framework behind them
Mitigating model risk in AI
Advancing a model risk management framework for AI/machine learning models at financial institutions
Lessons for academic research from model risk management in financial institutions
The authors suggest that model risk management practices used in financial institutions can be applied to academic research and enhance research outcomes.
EBA to address double-counting caused by new capital floor
Existing EU capital add-ons for model risk would duplicate new Basel floor on internal models
Basel stops short on wrong-way risk
New guidelines a step in right direction, but experts warn they won’t prevent another Archegos