Model risk management (MRM) and robust model validation are critical for financial institutions and fintechs of all sizes. Guidance from the Federal Reserve and the Office of the Comptroller of the Currency (OCC) via Supervisory Letter 11-7 (SR 11-7) establishes standards for MRM for financial institutions. These standards cover model development, implementation, validation, and governance.

Upon receiving data, Asurity assisted with documenting data lineage, resolving data issues, improving data to be fit for analysis, and advising the bank on data management best practices. Asurity leveraged data analysis software platforms and bespoke analytics to review and analyze the bank’s loan data and worked with the bank to address gaps found in the data to build better redlining and regression models. Upon completion of the model builds, Asurity drafted detailed model documentation and supported the client through the model validation process. At the request of MRM, Asurity created challenger models with different criteria to further support the adequacy of the original models built. Additionally, Asurity tested various proxy methodologies and thresholds to support the bank’s choice of proxy methodologies for indirect auto lending. Following successful validation and approval of the models, Asurity finalized model documentation and recommendations for future data enhancements.