Navigating SS1/23

Navigating the complexities of compliance with SS1/23, the financial industry faces a significant challenge that demands a nuanced and comprehensive approach. This detailed session explores the intricacies of SS1/23 compliance, emphasizing the evolving landscape of model risk management (MRM) and governance.

Adam Tan, leading the model risk management at KPMG UK, shares insights on the industry’s journey toward SS1/23 compliance, underscoring the mix of excitement and apprehension surrounding model risk. With the deadline for SS1/23 compliance looming, firms are diligently performing gap analyses and drafting remediation plans. Tan emphasizes that firms need to reassess their governance processes, controls, and mechanisms to effectively manage the proliferation of new model types and address challenges related to model explainability, bias, ethics, and data drift.

Paul Peeling, a principal technical consultant at MathWorks, introduces Modelscape, a platform designed to support the MRM lifecycle and address compliance challenges. He discusses the principles-based approach of SS1/23, advocating for competencies that extend beyond mere compliance to include data lineage, model lifecycle management, documentation, and governance. Paul elaborates on the application of data lineage and governance techniques, model risk scoring, and the integration of documentation and validation activities within the MRM framework.

This session also touches upon the unique challenges posed by AI models, with Tan noting the industry’s cautious approach and the need for tailored governance and validation techniques. Peeling and Tan discuss the subjective and quantitative aspects of model risk scoring, emphasizing the importance of a balanced framework that accommodates both dimensions.

In conclusion, the event underscores the criticality of a holistic and flexible approach to SS1/23 compliance, highlighting the role of platforms such as Modelscape in enabling firms to navigate the complexities of model risk management with confidence. The discussion illuminates the path forward for financial institutions, emphasizing the need for continuous adaptation and the development of robust governance frameworks to meet the evolving demands of regulatory compliance and risk management.