SR Letter 11-7 - Supervisory Guidance on Model Risk Management

On-Demand Schedule Sun, October 20, 2019 - Sun, October 27, 2019
Duration 90 Mins
Level Basic & Intermediate
Webinar ID IQW19J1002

  • Background and Model Risk
  • Purpose and Scope of the Guidance
  • Model Risk Managemen
  • What is model risk
  • How model risk is managed
  • How to understand the guidance provided in “SR Letter 11-7: Guidance on Model Risk Management”.

Overview of the webinar

  • Model risk occurs when a financial model is used to measure quantitative information (like a firm's market risks or value transactions) and the model fails or performs inadequately which leads to negative outcomes for the firm.
  • Model risk is present whenever an insufficiently accurate model is used to make decisions.
  • Model risk can arise from using a model with bad specifications, programming or technical errors, or data or calibration errors.
  • Model risk can be reduced with the right risk management independent review.
  • The Federal Reserve and Office of the Comptroller of the Currency (OCC) have issued SR Letter 11-7: Guidance on Model Risk Management., intended for use by banking organizations and supervisors for the management of model risk

Who should attend?

  • Asset managers
  • Broker/dealers
  • Supervisors
  • Financial officers and controllers
  • Risk officers
  • Operational risk managers
  • Board members
  • General (legal) counsel
  • Internal and external auditors
  • Information technology managers
  • Regulators who supervise or examine banks or financial institutions
  • CFOs
  • COOs
  • CROs
  • CIOs
  • CPAs
  • CBAs
  • CFEs

Why should you attend?

  • Banks and financial firms need to be aware to the possible adverse consequences (that also includes possible financial loss) of decisions that they may make that are based on financial and other models that are incorrect or misused. These firms should address those consequences through active model risk management. This webinar, on the Fed’s SR letter 11-7, provides the base for understanding the key aspects of an effective model risk management framework, including robust model development, implementation, and use; effective validation; and sound governance, policies, and controls. Understand the requirement of the Federal Reserve and the OCC in the management of model risk
  • Discover the risks associated with financial modeling and how they are managed
  • Explore the model validation process
  • Recognize the different steps in the model risk management stages

Faculty - Mr. Stanley Epstein

Stanley Epstein has a Master’s in Economics, which he earned with a dissertation on financial innovation, and a Bachelor’s in Accounting. He has had extensive experience in banking and IT specifically the operations, payments, RTGS and the operational risk aspects of banking in the UK, Europe, the USA, Australia and Southern Africa. His bank-operations, payments systems, operational risk, and clearing house experience is wide ranging and includes working closely with organizations such as UNCITRAL, Deutsche Bank and CHIPS in New York; APACS, British Bankers Association, CLS and Barclays Bank in London; Crédit Agricole in France; UBS and Credit Suisse in Switzerland, the central bank in the Netherlands; Alpha Bank in Greece; the central bank in Romania; the central bank in Kazakhstan; Bank Leumi and the central bank in Israel; the Standard Bank, Clearing Bankers Association; Bankserv and the central bank in South Africa and ANZ and Commonwealth Bank in Australia.

 

Commencing his career at the Standard Bank of South Africa he gained a thorough grounding in all aspects of banking ranging from the bank’s branch system, back-office payments processing. He was also closely involved in the development of electronic banking at the Standard Bank. At a banking industry level he was involved in the creation and development of STRATE (Central Securities Depository) in South Africa dealing with the dematerialization, clearing and settlement of all financial instruments in that country. He also served as Vice Chairman of the South African Clearing Bankers Association’s ERAG Group (an interbank payments/operations risk initiative established to identify and eliminate operational, legal and other risks in electronic payments) and later as Chairman of the Payments Association of South Africa Operational Risk Committee.

On leaving South Africa he joined Fundtech Corporation, a leading provider of financial technology based in the US.

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