rt360 Model Risk Management

Manage model risks effectively

Effective model risk management framework to manage, measure and mitigate model risks

The rt360 Model Risk Management (MRM) product helps to manage the lifecycle of models used in a bank, to mitigate the risks that can arise from the usage of models and ensure robust governance and compliance with various regulations such as:

The US OCC- SR 11-7 guidelines on model risk management and governance
The EU’s TRIM MRM guidelines on Internal Models
The UK’s PRA 2024 guidelines to implement MRM principles
The Central Bank of UAE (CBUAE) Model Management Standard (MMS) and Model Management Guidance (MMG)
Basel guidelines on IRB models and rating scales
Financial Stability Board (FSB) guidelines on IFRS9 models and Climate risk monitoring and disclosures
2023, The UK’s PRA guidelines, and EU’s revised guidelines on Internal Models, related to climate-related risk, ESG coverage, Model Risk Audit, and AI and ML models

rt360 Model Risk Management has integrated capabilities to support model risk governance and monitoring activities to manage model risk to ensure compliance with various regulations

Key Features

Model configuration

Allows to configure, customize, manage changes, and track easily without much intervention from bank IT staff.

Data operations

From Data Ingestion, Transformation, Loading and Data Quality.

Model estimations

Different credit risk model parameters such as PD, LGD, EAD and ECL.

Model validation

Includes Quantitative Validation (Discriminatory Power Tests, Calibration, Benchmarking and Stability) and Qualitative Validation.

Model management

Covering model inventory, model issues and management of model under development.

Model workflow / Case management

Functionality for transparency and ease of audit.

Stress testing and scenario analysis

For various parameter level and macroeconomics scenarios.

Reporting

Functionality to view and download reports in predefined formats.

Model inventory management

Model inventory is a centrally controlled Single Source Of Truth (SSOT) for the model artifacts, model codes, review outcomes, documentation, and data lineage. It dynamically manages the model artifacts, model code versions, and validation projects.

Model validation project management

rt360 Model Risk Management provides tools to create, manage and close validation plans and model risk reviews. It supports performing quantitative analysis, creating documents, and managing findings and queries.

Model configuration

Configure changes in a no-code/low-code environment. Avail the flexibility to configure data, models and tests. The user can customize, manage changes, and track easily using templates and queries.

Model workflow

Configure workflows that enable the model risk management team, model developers, and model validators to initiate a specific task/project, review, and take required action for e.g., model onboarding. rt360 Model Risk Management enables the validation of project registration, follow-ups and and query management.

Data management

Unlock versatile data ingestion capabilities that seamlessly handle structured, semi-structured, and unstructured data, converting it into a unified format for simplified processing.

Model validation

rt360 Model Risk Management includes quantitative validation (discriminatory power tests, calibration, benchmarking and stability) and qualitative validation.

Stress testing and scenario analysis

Model Risk Management enables stress testing and analysis of various parameter-level and macroeconomics scenarios.

Reporting

rt360 Model Risk Management includes a functionality to view and download reports in predefined formats.

Benefits

Single source of truth

Maintain a Single Source Of Truth (SSOT) for all aspects of model risk management. Define model parameters, validation frequency, and thresholds.

Bolster internal expertise

Track model issues to closure. Develop expertise within the bank and thereby reducing the reliance on external support for periodic validation.

Structured case management

Have structured case management among model stakeholders like CROs, MRM Committee, model developers and validators.

Minimized cost and effort

Scale up on model risk management capabilities with minimal efforts. Set up iterative validation exercises without any additional cost.

Brochure

rt360 Model Risk Management

Manage the lifecycle of models used in your organization to mitigate risks arising from them and to ensure compliance.

Download Now

rt360 Model Risk Management

Powering the Future of Risk Management for UAE Banks.

Download Now

Frequently Asked Questions

What is Model Risk Management and why is it important for financial institutions?

Model Risk Management (MRM) is a comprehensive framework used by financial institutions to manage, measure, and mitigate the risks associated with the use of financial models. These models influence decisions on credit risk, market risk, valuations, and regulatory capital. MRM is crucial because it ensures that models perform accurately and reliably, safeguarding against financial losses and regulatory penalties. Effective MRM promotes robust governance and compliance, aligning with regulations such as Basel III, SR 11-7, and OCC 2011-12, thereby enhancing the financial institution’s credibility and stability.

What are the primary objectives and benefits of implementing a Model Risk Management (MRM) framework?

The primary objectives of implementing a Model Risk Management framework include ensuring the accuracy and integrity of models, promoting regulatory compliance, and mitigating financial risks. Benefits of a robust MRM framework are multifold: it enhances decision-making confidence, ensures compliance with regulatory requirements like CCAR and FRTB, and helps in maintaining financial stability by detecting and addressing model deficiencies early. Additionally, a well-structured MRM framework supports a transparent audit trail and effective risk reporting, vital for both internal management and regulatory scrutiny.

What challenges do organizations face in managing model risks without a dedicated Model Risk Management (MRM) system?

Without a dedicated Model Risk Management (MRM) system, organizations face several challenges in managing model risks effectively. These include difficulties in maintaining model accuracy and compliance over time, especially as models increase in complexity and quantity. Organizations may struggle with inconsistent data quality, inadequate model validation processes, and poor documentation, leading to increased operational risks and regulatory scrutiny. Moreover, the absence of a centralized MRM system complicates the tracking of model performance and issues, thereby hindering efficient governance and risk mitigation.

What sets rt360 Model Risk Management (MRM) apart from other products in the market?

rt360 Model Risk Management (MRM) stands out in the market through its advanced AI/ML-enabled capabilities that optimize the effectiveness and efficiency of model risk management. It incorporates ML algorithms that can predict potential model failures and suggest preventative measures, enhancing predictive accuracy and reducing risk exposure. AI-driven analytics within rt360 help automate complex processes such as model validation and scenario analysis, enabling faster and more accurate decision-making. Additionally, its AI capabilities facilitate dynamic adaptation to new regulatory requirements and evolving market conditions, enabling compliance.

How can rt360 MRM help my business conform to an integrated Model Risk Management (MRM) framework?

rt360 Model Risk Management (MRM) can significantly enhance your business’s adherence to an integrated Model Risk Management framework by providing a holistic solution that covers all aspects of model risk management. It ensures robust model governance through comprehensive features like Model Management, which includes an inventory and tracking system for model issues. The system’s structured case management facilitates effective communication among stakeholders such as CROs, Model Developers, and Validators. Furthermore, rt360’s capabilities in stress testing, scenario analysis, and regular reporting help meet compliance standards set by international and local regulatory bodies, ensuring that your business remains compliant.

rt360 Early Warning System

Identify credit risks proactively leveraging end-to-end predictive analytics.

rt360 RAROC Calculator

As you focus on credit growth for your bank, capital allocation and pricing is critical to maximizing profitability and driving sustainable growth

rt360 Model Risk Management

Global regulators in recent times have paid an increasing attention to managing risks arising from extensive use of models in decision making.

rt360 Expected Credit Loss

With the introduction of the global International Financial Reporting Standards-9 (IFRS 9) and its equivalent Indian Accounting Standards (IND AS) 109, financial institutions are adopting scientific methods for computing credit losses.

rt360 Asset Liability Management

Growing regulatory mandates by the Bank of International Settlements’ (BIS) demand automated systems for robust asset-liability management.

BCT Digital’s rt360 risk management product suite transforms the world’s leading enterprises, drawing on the strengths of next-generation technologies, sophisticated AI/ML models, data-driven algorithms, and predictive analytics. Its revolutionary Fintech, Regtech, and SustainTech solutions help enterprises optimize their core governance, risk, and compliance processes, enabling them to augment their positioning and go-to-market capabilities.