Model Governance

From Open Risk Manual


Model Governance is the name for the overall internal framework of a firm or organization that controls the processes for Model Development, Model Validation and Model Usage, assign responsibilities and roles etc.

It is in principle a more general (superset) framework of Model Risk Management and its associated governance in that the latter focuses on Model Risk aspects whereas model governance incorporates the entire set of considerations (also opportunities) of using models, advanced quantitative and analytic tools within an organization.

Issues and Challenges

  • Immature topic with little established best practice.
  • The Model Risk aspect is driven primarily by regulatory requirements