Model risk and model validation of fraud and KYC models having AI and ML as emerging trends
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By Ayan Mukherjee, Senior Product Owner, VP, Model Validation, ING Bank
How do you manage model risk at ING?
Models are imperfect reflections of reality; they generate model risk which cannot be eliminated, but can be made transparent to the organisation and managed. Model risk is the risk that the financial or reputational position of a financial institution is negatively impacted because of the use of models. Process of identification, assessment, control (acceptance or mitigation) and monitoring of the risks caused by the use of models is done through Model Risk Management (MoRM). The main aim is to identify, manage and mitigate model risk by ensuring the right level of MoRM control mechanisms per model class. This can be achieved through: