Financial services AI
Model risk management
Governance for risks created by incorrect or misused models.
Also known as: MRM
Definition
Model risk management establishes ownership, inventory, validation, controls, monitoring and challenge across the model lifecycle.
Why it matters
Generative AI introduces new behaviours, but banks should connect them to established accountability and independent-validation disciplines.
Related concepts
- AI and model inventory
A controlled record of models, AI systems, owners, uses and risk status.
- Three lines of defence
A governance model separating risk ownership, oversight and independent assurance.
- Continuous evaluation
Rerunning tests as a system and its environment change.