Describe the meaning of model risk.

ii. Discuss the sources of model risk.

iii. Analyze various characteristics that causes model risks.

A good model risk management (MRM) framework should be crafted based on industry best practices and conform to regulatory guidelines.

iv. Verify this statement. You are required to use the references from research articles in your discussion. The discussion should provide the background, the contemporary issues, its effects on the financial institutions' operations and the suggested solutions.

Answer rating: 100% (QA)

i Model risk refers to the potential for errors or inaccuracies in financial models which can lead to incorrect financial decisions and significant lo... View the full answer