The three federal prudential banking regulators on Friday issued revised model risk management guidance generally applicable to banking organizations with more than $30 billion in total assets.
The Federal Deposit Insurance Corp. (FDIC), in a release, said the guidance “does not set forth enforceable standards or prescriptive requirements, and non-compliance will not result in supervisory criticism.”
The guidance was issued jointly by the FDIC, Federal Reserve, and Office of the Comptroller of the Currency (OCC). Among other things, it clarifies that model risk management should be tailored commensurately to the size, complexity, and model risk profile of a banking organization, the FDIC said.
“To support banking organizations’ model risk management practices, the revised guidance highlights sound principles for effective model risk management—in particular, by discussing the factors that influence model risk and the features of effective model development and model use; model validation and monitoring; and governance and controls. The revised guidance also discusses considerations specific to vendor and other third-party products, including validation of these products,” the agency said in a release Friday.
The FDIC summarized the action in FIL-15-2026 and rescinded the guidance provided in FIL-22-2017 and FIL-27-2021.
Leave a Reply