The Institute of Risk Management’s (IRM) Internal Model Industry Forum (IMIF) has released its eighth guidance document for the insurance market.
The Journey from Model Validation to Model Risk Management was developed to help insurers pursue continuous improvement of their modelling capability in response to a fast-changing world. It offers a framework for developing a model risk management regime, encouraging a risk-based approach which looks at all models used by the firm, not only those for regulatory purposes.
IRM stressed that that frameworks need to be tailored specifically to the individual firm’s risks and culture. This helps improve decision-making and allows for the most efficient allocation of resources, therefore adding significant value.
Philip Whittingham FIRM, head of model validation and risk governance at XL Catlin, who is also the chair of the IMIF, and Marc Taymans, managing partner at Risk Dynamics, led a team of industry practitioners in creating the guidance.
Whittingham said, “Models are an essential tool to help insurers manage uncertainty but users need to be aware of whether they are appropriate for the decisions they are supporting. Model risk management extends significantly beyond model validation, which is just one control activity within a robust model risk management process, and brings a range of benefits.
“Best practice is still developing but our project team has come up with some useful industry resources including an example risk classification and an example model risk management policy as a starting point.”
The IRM recently made three new Board appointments. These senior figures from global business will add to the strategic leadership of the organisation. The Board of Directors (the Board) is the governing body of IRM and is responsible to the members for managing the business and affairs of IRM. Rahat Latif, head of enterprise risk management division at Qatar Gas, Maria Papadaki, managing director at the Dubai Centre for risk and innovation management, and Ray Flynn, is a specialist consultant in risk management, have all joined the board.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
