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By Mitchell Button, SVP, Model Validation, US Bank
What are some key activities that can benefit from automation within model risk management?
Many validation performance tests such as backtesting, sensitivity analysis and diagnostic testing are easily automated by building strong generalized code that can be applied to a number of similar model types for instance logistic regressions or time series forecasts. More advanced automation activities can interpret the results of this analysis against pre-determined thresholds to convey automated interpretations and insights into validation results.
Issue management also becomes another highly useful area to automate. Our automation initiatives have sought to extract certain text from dynamic documents allowing validation managers and executives to extract real time insights from the validation analysis during the validation process and escalate them where appropriate.
