2021 RMA Internal Audit - Model Validation and Governance On Demand

Financial models are an accepted and valued tool for estimating earnings, assessing values, and evaluating risks. Models have become indispensable and practical necessities to an increasingly complex financial world. However, despite their virtues, an overlooked calculation error or data integrity issue can compromise the results of these models and jeopardize the original modeling objectives – while also potentially costing companies both time and expense to fix. The use and complexity of these models continues to increase with the ever-changing market and business conditions, resulting in increased model risk with banks increasing the use of data-driven, quantitative decision-making tools.

The role of Internal Audit in assessing model risk is the guiding principle of the "effective challenge" of models. Effective challenge consists of critical analysis by objective and informed parties who can identify model limitations and assumptions and challenge developers on their methodology and approach. Effective challenge requires a combination of appropriate incentives, competence, and influence in the organization.

The objectives of this webinar are to learn and understand the components and key risks of Model Validation and Governance including:

• Information and Governance
• Data and Assumptions
• Processing
• Reporting