Case Study

Establishing an Enterprise-Scale Model Risk Management Center of Excellence

Industry

Banking & Financial Services

Location

United States

Our Contributions

Model Risk Management, Model Validation, Regulatory Compliance, Quantitative Analytics, Stress Testing & Regulatory Models

As banks increasingly rely on statistical and machine learning models to drive credit decisions, risk management, regulatory reporting, and strategic planning, strong model governance has become critical. Regulatory expectations mandate independent validation, transparency, and documented controls across the entire model lifecycle.

To meet stringent regulatory requirements and manage a growing and diverse model inventory, large banks are adopting centralized Model Risk Management (MRM) Centers of Excellence to ensure consistent validation, audit readiness, and ongoing compliance.

The Challenge

The bank required the establishment of a centralized Model Risk Management Center of Excellence to independently validate a large, diverse inventory of statistical and analytical models across business functions. The validation needed to comply fully with SR 11-7 and OCC Bulletin 2011-12 regulatory directives.

The scope included complex model types spanning credit risk, fraud, economic capital, regulatory stress testing, and marketing analytics, built using a wide range of traditional statistical, econometric, and machine learning techniques. Ensuring consistency, quality, regulatory compliance, and timely delivery across this spectrum was the core challenge.

Our Approach

Coforge designed and implemented a comprehensive, regulator-aligned model validation framework, enabling independent, repeatable, and auditable validation across the bank’s enterprise model inventory.

Centralized Model Validation Framework

Established a standardized validation approach covering the full lifecycle of model assessment in alignment with regulatory expectations.

Model Theory Review

Conducted detailed reviews of model objectives, theoretical foundations, and segmentation strategies in close collaboration with model owners.

Data Input Validation

Performed rigorous input data reconciliation, variable selection assessment, and validation of data quality and suitability.

Data Output Evaluation

Evaluated model outputs through in-sample and out-of-time testing, supported by internal and external benchmarking techniques.

Override Analysis & Governance

Assessed the magnitude, frequency, and business justification of overrides to ensure transparency, control, and regulatory defensibility.

Impact to Date

The Model Risk Management Center of Excellence delivered scale, consistency, and regulatory confidence across the bank’s enterprise model ecosystem.

250+ Models

Validated Across Functions

120+ PPNR Models

Validated for Regulatory Stress Testing

100% SLA Adherence

Quality & Timelines

100% Regulatory Compliance

Audit-Ready Validation