Non-financial risk

Financial Institutions Face Risk with Models, New RMA Study Finds

Retrieved on: 
Wednesday, April 20, 2022
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PHILADELPHIA, April 20, 2022 /PRNewswire/ -- Financial institutions face a number of risks as they speed up digitization and rely more heavily on new technology to influence lending and other decisions, a new study of 62 banks by the Risk Management Association (RMA) has found.

Key Points: 
  • This includes some powerful innovative practices like AI-driven models," said Edward J. DeMarco, Jr., the head of Non-Financial Risk at RMA.
  • The Survey of Model Risk Management, Vendor Model Validation, and Third-Party Model Risk covers the model risk management practices of North American banks ranging from $2 billion to $2 trillion in assets and explores in depth how financial institutions use and validate third-party models.
  • RMA promotes an enterprise approach to risk management that focuses on credit risk, market risk, and operational risk.
  • Headquartered in Philadelphia, Pennsylvania, RMA has 1,600 institutional members that include banks of all sizes as well as nonbank financial institutions.