Model risk

Model risk

Risk of loss arising from valuing financial instruments with a model that is inaccurate (e.g. makes incorrect underlying assumptions, does not capture all scenarios that could occur in reality, or fails under extreme market conditions). Also known as model uncertainty.
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59% indicated that their model risk management framework now requires independent model validation, a continuation of trends identified in previous surveys.
Model Risk in Financial Markets: From Financial Engineering to Risk Management
Crowe Howarth LLP said it has introduced its Crowe Model Risk Manager solution to help financial institutions more effectively manage model risk and respond to examiner expectations.
The floor is meant to mitigate model risk and measurement error stemming from internally-modelled approaches,'[euro]oCi said the Basel Committee.
He joins Berkshire from M&T Bank where he was VP of enterprise risk management, leading the Model Validation and Model Risk functions.
model risk in terms of valuation and pricing of its purchased debt
O'Hanlon cited, "Institutions are increasingly looking to design products more holistically - looking at profitability end-to-end, taking into account everything from counterparty risk to liquidity risk, model risk and even operational risk across the full life cycle.
Oracle said its financial services model risk management tool should permit clients to assess flaws in their investment models and allow for constant assessment of risk.
derivatives markets, model risk, risk management, swaps and other financial innovations.
However, PCs are not made for continuous operation and companies using this model risk losing their valuable data, along with facing reduced operational efficiency.

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