The Federal Reserve and Office of the Comptroller of the Currency guidance SR Letter 11-7 (link resides outside IBM) defines a model as "…a quantitative method, system, or approach that applies statistical, economic, financial, or mathematical theories, techniques, and assumptions to process input data into quantitative estimates."
Model risk can occur when a model is used to predict and measure quantitative information but the model performs inadequately. Poor model performance can lead to adverse outcomes and result in substantial operational losses. Implementing model risk management in a modern information architecture helps you:
- Speed time to help meet regulatory compliance and other risk objectives.
- Simplify model validation across multiple clouds.
- Take advantage of models and data running virtually anywhere.
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