Global Model Practice Survey 2011
Growth through Model Control
Deloitte’s Global Model Practice Survey (GMPS) provides insight into the maturity of model practice within financial institutions. This survey focuses on developments in the various elements of the model life cycle. The survey was conducted during the second half of 2011, with the participation of 89 financial institutions from all around the world.
Models are at the heart of financial institutions, and they can be powerful tools in assessing risk and improving decision making. The financial crisis taught financial institutions that simply relying on the outcome of models is itself a risk. So, understanding the risks, their limitations and the economic environment is critical when using models.
- 25% of respondents find it challenging to reject a model;
- Around 15% of respondents never reject a regulatory model;
- About half of respondents indicate they have no policies on expert judgment, data quality, or model implementation or consider the quality of these policies to be poor;
- Around 20% of respondents indicate that the ownership of the model governance framework is ambiguous, whilst only 20% of respondents indicate that ownership is assigned to a department that is part of the framework itself.
The survey results illustrate that respondents face difficulties with enhancing their model practice to a sound standard. Based on this observation, our modelling team has designed a comprehensive set of key criteria and converted these into a leading practice checklist, which may help you enhance your model practice standards. This checklist can be found in the Appendix of the report.
Deloitte’s UK analytics team has the knowledge and experience to help you with your modelling issues. The team has supported our clients to design, build, validate and apply models used for internal management and regulatory purposes.