Key facts
- Control frameworks for recognizing and responding to model failures post-deployment are inconsistent among banks.
- This inconsistency extends to critical Tier 1 models.
- Many banks lack documented plans for handling model breaches.
- The findings are part of Risk.net's Model Risk Benchmarking study.
A study by Risk.net has found that banks exhibit inconsistencies in their control frameworks for managing model failures after deployment, even for their most critical Tier 1 models. The research indicates a significant gap in documented plans for identifying and addressing breaches. This issue is part of an ongoing series by Risk.net that benchmarks bank model risk management practices. The study highlights that while predeployment validation may be strong, the escalation of breaches post-deployment is often handled in an ad hoc manner, affecting even large financial institutions.