panchicore/mrm.csv

	Front	Back
	What is Model Risk Management (MRM)?	The process of identifying, assessing, and mitigating risks associated with the use of models in decision-making.
	Why is MRM important in financial institutions?	To ensure models produce accurate, reliable results and to comply with regulatory requirements.
	What are the two main sources of model risk?	1. Model errors or limitations. 2. Incorrect or inappropriate model use.
	Define 'model validation' in MRM.	The process of assessing a model's performance, assumptions, and limitations to ensure it meets its intended purpose.
	What is a 'model inventory'?	A centralized list of all models used by an organization, including their purpose, status, and risk level.
	What is the role of governance in MRM?	To establish policies, procedures, and oversight for managing model risk effectively.
	Name a key regulatory framework for MRM.	SR 11-7 (Federal Reserve and OCC guidance in the U.S.).
	What does SR 11-7 emphasize?	It emphasizes the need for model validation, governance, and a comprehensive inventory of models.
	What is model performance monitoring?	The ongoing process of tracking a model's outputs to ensure it remains accurate and relevant over time.
	What is model documentation?	Comprehensive written records of a model’s purpose, design, assumptions, and validation results.
	Why is independent validation important in MRM?	To avoid conflicts of interest and ensure an unbiased assessment of the model's risks and limitations.
	What is 'model lifecycle management'?	The process of managing a model from development through deployment, monitoring, and retirement.
	What are the three lines of defense in MRM?	1. Model developers. 2. Independent model validators. 3. Internal audit.
	Define 'conceptual soundness' in MRM.	Assessing whether a model's design and underlying theory are appropriate for its intended use.
	What is model risk quantification?	The process of estimating the potential financial or operational impact of model errors or misuse.
	What are 'model assumptions'?	Simplifications or approximations made in a model to represent complex real-world phenomena.
	What is back-testing in MRM?	A technique to evaluate a model’s predictions by comparing them to actual outcomes using historical data.
	What is stress testing in MRM?	Assessing how a model performs under extreme or adverse conditions to evaluate its robustness.
	What role does technology play in MRM?	It supports automation, monitoring, and analysis, enhancing the efficiency and accuracy of MRM processes.
	Name a common challenge in MRM.	Keeping models up-to-date and relevant in the face of changing market conditions and regulatory requirements.