Banks are highly dependent on models that are used for a wide variety of purposes across nearly all functions in a bank and have become a key component of operational efficiency, risk management and regulatory compliance. Banks use models to evaluate risks, assess capital adequacy, define funding requirements, understand customer behavior, manage data analytics and make investment decisions.
Indeed, the use -- and importance -- of models is only set to grow as the trend of digitalization and the use of artificial intelligence, machine learning and big data increases the number and complexity of models even more. The correct use of sophisticated models is key to making the right decisions for the future. The imperative for banks to effectively manage and monitor their Model Risk Management (MRM) activities is only growing; therefore, MRM has become a matter of strategic importance.
Learn more about the key challenges financial institutions are facing, how they should be addressing them and how KPMG can help.