Model Risk: Talent and Cost Rank Top of the List

Risk managers ranked talent and cost as the biggest challenges to expanding internal model validation capabilities, according to the inaugural Model Risk Management survey of RMA member institutions.

Participating banks outlined talent pooling and managing costs associated with model risk management as their top concerns.  The following chart shows the percentage of responses by asset size. Smaller participants also frequently cited bank resources as a challenge for the expansion of model validation capabilities.

Participating banks also reported small support team sizes for their model risk management capabilities, with many firms having less than three full-time employees. The supporting teams manage model inventories and MRM workflows. Notably, most participating firms reported they were at their ideal validation staffing levels or would hire one or two full-time employees to reach their ideal size.

The full survey results are available for RMA institutional members who participate in the Model Risk Management survey. Would you like to understand how your MRM capabilities compare against your peers?