Model Complexity

From Open Risk Manual

Definition

Model Complexity is an attribute of a model referring to the technical sophistication or quantity of its components or elements. Complex models are models with many moving parts or components or models that rely on elaborate mathematical frameworks.

It is generally considered the case that increased model complexity carries higher Model Risk

Issues and Challenges

  • Complexity is a subjective and contextual term and there is a lack of an overall agreed framework to define complexity