Modelscape: Implementing Model Risk Management to Overcome Model Risk Challenges

Watch an introduction to the concept of model risk management and the importance of managing model risk within financial institutions. You’ll learn how models are used in financial decisions, such as mortgage loan approvals, and that the accuracy of these models and the data they use are crucial for making sound decisions. The speaker highlights the potential consequences of using inaccurate models or misapplying them, using a significant financial loss by J.P. Morgan as a case study.

Regulatory measures have evolved to mandate a robust model risk management framework, with regulations in various countries emphasizing the need for clear roles, comprehensive model lifecycle oversight, detailed documentation, and continuous performance monitoring to avoid penalties and reputational damage.

Learn about the “three lines of defense” strategy for effective risk management, which includes the creators and users of models, independent validators, and auditors. Modelscape is a model risk management solution by MathWorks, covering development, validation, testing, deployment, monitoring, and governance. It offers features like a centralized database for model information, enhancing documentation, transparency, and compliance.