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      With the increasing use of models and AI by all organisations and entities, KPMG’s Modelling and Model Risk Management (MMRM) Managed Service enables faster, better-informed decisions by unlocking the full potential of your models.

      We support development, validation and governance across traditional risk models, as well as advanced AI, GenAI and machine-learning techniques.

      Effective MMRM helps ensure models are accurate, robust and aligned with regulatory expectations.

      As pressure increases, we help optimise every stage of the model lifecycle, bringing deep expertise to streamline operations and deliver efficient, reliable results.

      Rob Smith
      Rob Smith

      Partner, Head of Risk and Regulatory Advisory

      KPMG in the UK

      Andrew Fulton
      Andrew Fulton

      Partner, Risk and Regulatory Advisory

      KPMG in the UK

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      Client challenges

      MMRM has become significantly more demanding. Firms operate in an environment where regulatory expectations, modelling techniques and AI capabilities evolve at pace. Effective MMRM requires operating models that can continuously adapt, so firms can balance regulatory change, skills shortages and fast‑moving technology, while continuing to operate efficient, transparent and well‑controlled model environments.

      Key challenges facing firms include:

      • The accelerating pace of change across regulation, data, modelling techniques and AI

        Make it increasingly difficult for firms to keep frameworks, controls and skills up to date using traditional operating models.

      • Tightening regulatory expectations

        Requiring firms to rebuild models, strengthen governance and refine end‑to‑end model risk management practices.

      • Scarcity of experienced modelling and validation resources

        Driving up costs and making sustainable MMRM operating models difficult to maintain.

      • The use of AI and machine learning techniques

        Are now essential but introduce additional risk without appropriate governance and controls.

      • Manual and legacy processes with increasing operational complexity

        Leading to error risk and increasing cost across the model lifecycle.

      • High upfront technology investment requirements

        Slowing adoption and increasing dependence on third‑party vendors.

      • Difficulty scaling delivery

        To meet regulatory deadlines or remediation activity without increasing fixed costs.

      • The need for strong quality control

        Demanding disciplined model development, independent validation and ongoing oversight within a robust MRM framework.

      • Increased demand and accessibility to models

        Driven by the expansion of AI and advanced analytics.

      • Adopting AI requires a cultural shift

        Building trust, clear accountability and skills so teams work confidently alongside AI within well‑governed decision‑making.

      KPMG’s MMRM Managed Services is designed to directly offload these challenges by providing clients with a scalable, efficient, and high-quality way to meet their modelling needs and regulatory obligations, without the heavy in-house burden.

      How we can help you

      KPMG’s MMRM Managed Services can meet you wherever you are in your MMRM journey, whether you are enhancing existing capability, driving major transformation or boosting efficiency through automation and selective AI. The modular design lets you choose the right level of support for your ambitions, maturity and regulatory demands, ensuring clarity and control at every stage. Areas of support include (but not limited to):

      Standard

      Resource augmentation

      Skilled specialists on demand, integrating into your team with rapid onboarding and zero tech build, giving you instant, disruption-free capacity. This flexible resourcing model enables surge resourcing capability to meet regulatory deadlines, remediation activity and periods of peak demand, without the cost, risk or disruption of permanent hiring or short‑term contractor reliance.

      Enhanced

      Full end-to-end Managed Services

      Comprehensive lifecycle coverage including data, development, testing, monitoring and validation, fully aligned with leading model risk management frameworks and regulatory expectations across regulated industries, delivering robust governance, strong compliance and dependable outcomes.

      Tailored

      AI-powered optimisation and automation

      Solutions designed around your organisation to strengthen frameworks, streamline processes and unlock efficiencies through automation and modern technology.

      What you will get: operational and commercial benefits

      Our MMRM Managed Services embeds operational and commercial benefits through clearly defined scope, governance and delivery ownership. This service can future proof your organisation as regulatory expectations, modelling techniques and AI capabilities continue to evolve.

      Depending on your needs, this can include the following core service components.

      You receive independent, scalable validation capability designed to remove operational burden, address resourcing and delivery challenges, and provide guaranteed commercial benefits from day one. This includes validation approaches suitable for both traditional models and increasingly complex AI enabled and machine learning based techniques.

      Our managed service delivery includes:

      • Independent model validation services delivered at scale, aligned to your internal standards and regulatory expectations.
      • High quality validation artefacts, including technical review documentation and validation reports.
      • Ongoing validation and re validation support, helping manage validation backlogs and periodic review requirements.
      • Thematic insights across validations, providing structured visibility of recurring findings, risks and improvement opportunities across the model landscape.

      KPMG have delivered more than 250 programmes and supported hundreds of models subject to regulatory reviews. We have delivered large scale GSIB engagements covering more than 10 model families.

      You receive a fully integrated modelling delivery capability, operating as an extension of your organisation and designed to support sustainable, well controlled modelling operations as regulatory, data and technology requirements change over time.

      Outsourced modelling delivery:

      • End to end support for modelling activities, including model development, implementation support, model monitoring and reporting.
      • Dedicated delivery teams with clearly defined work packages, service levels and governance.
      • Flexible resourcing models, including offshore and blended delivery, enabling capacity to scale efficiently in response to regulatory timelines and demand peaks.
      • Secure clean room delivery environments, supporting sensitive data handling without requiring clients to build or manage additional infrastructure.
      • An integrated operating model, aligned to existing first and second line teams, policies, processes and tooling.

      You receive practical automation and AI enabled capability, embedded directly into delivery rather than deployed as standalone tools.

      Deliverables include:

      • Standardised templates and workflows, reducing manual effort and improving consistency and auditability across MRM activities
      • AI enabled documentation and review tooling, supporting activities such as model documentation analysis, validation review, benchmarking and monitoring
      • Workflow optimisation and continuous monitoring solutions, improving transparency and reducing operational friction
      • Reusable tooling already proven within managed service engagements, enabling rapid deployment without upfront technology investment
      • Capabilities which evolve continuously, not one-off deployments.

      Example efficiencies delivered through KPMG developed AI‑enabled tooling and standardisation include up to a 60% reduction in end‑to‑end model documentation analysis and up to 40% less time spent drafting reports.

      To explore KPMG’s broader AI enabled capabilities and how AI is being applied across services to unlock value and manage risk, visit our “You can with AI” service.

      Find out more

      You receive a model risk management framework accounting for the most recent regulatory expectations, designed to remain fit for purpose as expectations evolve.

      Our deliverables include:

      • A cohesive set of policies and procedures for model risk which are compliant with regulations and enable effective ongoing risk management.
      • Assessments and benchmarks, showing compliance with regulation and comparison against peer firms.
      • Detailed actions and work plan to embed a regulatory compliant MRM framework.

      An example of this service included the enhancement and implementation of an SS1/23 aligned Model Risk Management framework, covering governance, model tiering, validation, post model adjustments and DQMs. The deliverables included gap assessment, MRM toolkits and guidance, and targeted upgrades to the model inventory and supporting systems to enable improved recording, tiering and ongoing oversight.

      Our Managed Services Catalogue

      Explore flexible Managed Service solutions for Modelling & Model Risk Management.

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      Commercial benefits

      Commercial benefits delivered across our managed service offering and embedded from day one include:

      • Clear accountability and ownership for defined modelling and validation delivery

        Reducing management overhead and coordination risk.

      • Scalable delivery model

        Enabling rapid response to fluctuating workloads without loss of control or quality.

      • Flexible capacity and predictable cost

        Through structured commercial arrangements that avoid reliance on short‑term contractor resourcing.

      • Efficiency gains across recurring activities

        Including reduced effort in model monitoring, documentation analysis, benchmarking and report drafting.

      • Improved quality and control

        Through standardised methodologies, disciplined execution, embedded quality assurance and consistent challenge.

      • Reduced operational and delivery risk

        With KPMG accountable for agreed service levels, timelines and delivery outcomes.

      • Future ready operating model

        Through services that evolve as regulation, modelling techniques and AI capabilities change, reducing the risk of obsolescence and repeated transformation costs.

      Proven delivery

      KPMG has supported a wide range of large, complex organisations across model development, validation and model risk management, including long‑running managed service arrangements delivering defined components of MMRM operating models.

      Our experience spans regulatory remediation, business‑as‑usual delivery and transformation programmes, supported by strong governance, senior oversight and consistent delivery quality.

      Our Managed Services in action

      Scaling modelling capability through a managed service

      A large global bank faced sustained cost pressure in its modelling function, driven by a constrained UK talent market and reliance on contractor surge resourcing. The bank needed to build long‑term capability while maintaining regulatory standards and delivery quality.

      KPMG established an integrated offshore Centre of Excellence, operating as a seamless extension of UK modelling teams. Delivery shifted to a blended onshore–offshore model, supported by automation, tooling and process optimisation. A fully governed operating model was implemented, with clear ownership, service levels and stakeholder oversight.

      We have worked with KPMG for the last three years and our experience has been very positive. I am happy with the deep, knowledge driven resource pool, senior management oversight and leadership drive. Overall, it was a pleasure working with the joint KPMG India & UK team and we are happy to say that KPMG is our most committed and trusted partner.

      SVP and Head of Model Risk Management

      Large Global Bank

      Improving model monitoring efficiency and control

      A UK retail bank experienced capacity constraints in running model monitoring activities under increasing regulatory scrutiny and reporting frequency. The bank needed stronger governance, improved efficiency and a more scalable operating model.

      KPMG transitioned model monitoring activities to a dedicated offshore delivery team. Reporting was enhanced and aligned to UK standards and revised risk policy requirements. The IFRS 9 monitoring process was strengthened, delivering measurable efficiency improvements, alongside a roadmap for templated monitoring frameworks and enhanced MI through Power BI.

      We have worked with KPMG for an extended period to deliver offshore and nearshore support across model development and related model risk activity. They have been consistently flexible and responsive, scaling support as needed while maintaining strong delivery discipline. The team delivers high quality outcomes aligned to regulatory expectations and our internal standards and brings in additional insight and specialist expertise when required. They are pragmatic, easy to work with, and effective at navigating complex stakeholder and regulatory environments, making them a trusted partner for our Risk & Compliance agenda.

      Head of Model Risk Operating Office

      Large UK Bank

      Flexible managed services for Model Risk Management

      A large UK bank sought a strategic partner to augment its Model Risk Management function across the full model landscape, including policies, validation delivery and validation planning. The bank required a flexible solution that could scale during peak regulatory periods and provide senior oversight where needed.

      KPMG implemented a flexible managed service arrangement, providing a core team that could scale up or down in line with demand. We supported the design of a new model risk policy and validation standard, delivered regulatory training, and shared market and PRA insights to support decision‑making.

      KPMG are supporting us with our Model Risk Management activities, including validations for IRB, IFRS 9, market risk and climate risk models. The team provides a flexible resource solution facilitated through a tailored MMRM managed service that has proved immensely useful in meeting internal and regulatory deadlines, alongside valuable market insights and consistently high quality delivery.

      Head of Model Risk

      Large UK Bank

      Our added value: Confidence, Control and Capability 

      Partnering with KPMG gives you confidence through deep expertise, control through strong governance and transparency, and capability through scalable, cost-effective delivery. The result: regulatory compliance, efficient operations and consistently high-quality outcomes. By engaging us as your partner in model risk management, you will see benefits such as:

      • Greater flexibility and scalability of your resources

        On-demand access to a larger, skilled team without the typical overhead. You can scale support up or down as needs while minimising fixed costs.

      • Improved focus on core priorities

        KPMG’s service minimises disruptions (for example, handling staff turnover, training new hires, or meeting sudden regulatory requests), so your internal teams can concentrate on strategic priorities, innovation and value creation.

      • Lower and more predictable costs

        Delivering clear commercial returns from year one, with reduced run‑rate costs compared to traditional in‑house or ad‑hoc consulting models. Our managed service is typically delivered at a lower blended cost, with a transparent pricing structure that eliminates surprises.

      • Resilience and future-readiness

        The partnership instils a more resilient operating model for MMRM. You benefit from the latest methodologies, tools, and updates (including AI and automation improvements) as we continuously improve the service. As regulations and market conditions evolve, your MMRM capabilities adapt without the need for large new investments.

      KPMG’s MMRM Managed Services is focused on building a strategic advantage in managing model risk, today and for the future.

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      Our people

      Rob Smith
      Rob Smith

      Partner, Head of Risk and Regulatory Advisory

      KPMG in the UK

      Andrew Fulton
      Andrew Fulton

      Partner, Risk and Regulatory Advisory

      KPMG in the UK

      Andrew Tonkin
      Andrew Tonkin

      Partner - Head of UK Managed Services

      KPMG in the UK

      Kasia Tinlin
      Kasia Tinlin

      Senior Manager, Risk and Regulatory Advisory

      KPMG in the UK

      MTD

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