In this report, we discuss the current trends in the supervision of model risk management in financial services firms, drawing on our views and experiences to outline how financial services firms can apply practical model risk management to build supervisory confidence in models and modelling.

We specifically draw on the experience and expertise of Deloitte model risk management teams worldwide, working in those areas that are of greatest current concern to supervisors across financial services.

Firms need to demonstrate to supervisors that model risk is being managed across all stages of the model lifecycle. Overall, we expect supervisors to attach most importance to the board’s oversight and challenge of the model, to effective, independent model validation, and to the organisational status of model risk management which enables these. 

How Deloitte can help

With a team of more than 700 professionals covering all aspects of model risk, Deloitte has implemented leading practices at organisations across financial services and developed and implemented technological solutions to help clients achieve scale and sustainability across all components of their model risk management frameworks, while complying with the strictest regulatory rules.

About the EMEA Centre for Regulatory Strategy

The Deloitte Centre for Regulatory Strategy is a powerful resource of information and insight, designed to assist financial institutions manage the complexity and convergence of rapidly increasing new regulation.

With regional hubs in the Americas, Asia Pacific and EMEA, the Centre combines the strength of Deloitte’s regional and international network of experienced risk, regulatory, and industry professionals – including a deep roster of former regulators, industry specialists, and business advisers – with a rich understanding of the impact of regulations on business models and strategy.

You can find more reports like this at Deloitte.co.uk/ECRS, where you can also sign-up for our monthly risk and regulation newsletter.