The Importance of Internal Audit in Model Risk Management
Model risk management is a process that financial institutions use to identify, measure, and mitigate risks associated with the use of models. Internal audit plays a vital role in this process by providing an independent assessment of a model risk management program’s adequacy and effectiveness. An internal audit aims to ensure that the model risk management program can address its risks. The internal audit assesses the program’s design and implementation, tests its controls, and evaluates the results. Effective model risk management services should include regular internal audits to ensure the program functions correctly. They identify potential problems and weaknesses in…