In recent years, the widespread use and heavy reliance on sophisticated financial and economic models to enable complex transactions and strategic decisions across the organization have led to the need to quantify, measure and manage model risk. Financial institutions must comply with an increasing number of regulations in the current environment. The pace of regulatory change has not slowed down, however, challenging financial institutions to keep up. Senior management recognizes the importance of model risk and has imposed stricter requirements on model development, model validation, model use and governance.
• Identifying and Managing Model Risk (download brochure)
• Making model risk management a core business function
• Key elements of effective model risk management in financial services
• Model risk management: Establishing a robust framework (webcast)
• 9 questions that can help you assess your model risk management needs
• ORSA requirements: Model risk management for insurance companieWithout a robust, well-conceived model risk management (MRM) process in place, the organization risks incorrect business decisions, financial misstatements, reputational damage or even financial loss. Proper design, validation, testing and controls through the model life cycle are essential, but in-house staff may not have the bandwidth or comprehensive knowledge needed to effectively mitigate these risks.
Grant Thornton MRM services
Grant Thornton LLP assists financial institutions with all aspects of MRM. Our MRM advisory services consist of highly experienced PhD-level professionals, former bank executives, academics and regulators.
MRM services include:
Why Grant Thornton?
- Model risk governance and controls assessment. We assist the internal audit function review the operating effectiveness of the MRM governance and control framework that supports your organization in managing and mitigating model risk.
- Model validation. Models may be built with a specific goal in mind, but then the parameters may expand or change. Our team can help you focus on your critical goals and their key regulatory components.
- Model re-performance. As your business and the regulatory environment change, we can help you in monitoring and reporting the performance of predictive models on a regular basis.
- Comprehensive Capital Analysis and Review (CCAR)/Dodd-Frank Act Stress Test (DFAST) models. To effectively comply with such regulations as CCAR and DFAST, many banks have developed complex capital planning and loss forecasting models. Our team is highly experienced in helping clients build these models or troubleshoot existing models.
- Model risk advisory. Senior executives and the Board are ultimately responsible for managing the aggregated model risk. Our team helps clients conduct gap assessment to quantify model risk within the company’s risk appetite tolerance.
Our MRM team has the skills you need to assess your model risks across the board. We offer:
- An available and responsive team. An available and responsive team. We are a large, global organization of member firms that is agile and nimble. Our relationship-led approach means you get more time and attention from partners and senior advisers, which leads to a deeper understanding of your business and more meaningful advice and recommendations. In fact, our goal is to anticipate the answers you’ll need before you even ask.
- An industry-focused team. An industry-focused team. Our highly experienced MRM specialists have experience with a broad range of financial models used to manage credit risk, market risk, compliance risk and operational risk. We are also experienced with the models you use in your daily business operations like those used for financial reporting, valuation and economic capital estimation.
- A regulatory compliance focus. A regulatory compliance focus. Our team brings practical experience as former regulatory employees coupled with deep technical skill, enabling them to offer a depth and breadth of experience and knowledge.
- The use of best practices. Our professionals use their deep experience and industry focus gained through working with a large number of financial services industry clients to bring you the latest MRM best practices.