Technology continues to enhance modeling capabilities leading to greater complexity, more granular data elements, and broader use of models. Given these advances, model risk is an advanced topic of Enterprise Risk Management (ERM) that is in various stages of implementation across industries. However, regulators and rating agencies increasingly demand an evolved framework to manage model risk, especially in light of principle-based valuations, economic capital models, and international valuation and capital methods (e.g. IFRS, Solvency II, IAIS ICS, etc.).
Foresight is here to assist companies with all aspects of model management. We have deep experience from beginning to end, establishing your framework to executing documentation and validation exercises.
Examples of Model Management elements that Foresight is prepared to assist you with:
- Model Governance. Defining the process and structure by which key modeling decisions are made within the organization. Sound governance allows management to understand the strengths and weaknesses of models and their usefulness in making business decisions.
- Policies and Standards. Defining the organizational rules and expectations around how models are initiated, changed, documented and validated is key to establishing a consistent model management culture.
- Model Documentation. Whether you are looking for guidance in best practices for model documentation or need assistance with the actual documentation of your models, we can help. Documentation should consider model structure, model assumptions, uses of expert judgment, and modeling methods.
- Model Validation. Validation is the key step of challenging the model to determine if it is truly fit for use. It is therefore critical that some level of independence be established between the validator and the model owner. We can help establish a validation program, perform validation activities, and deliver a robust validation report that communicates the status of the model including its weaknesses.
- Model Development. We have experience in numerous actuarial software programs and can hellp you design and develop efficient projection models.
- Spreadsheet Design. Designing effective and efficient spreadsheets consistently can be a challenge. Foresight can help your organization define and apply spreadsheet standards that promote efficiency, accuracy, consistency and communication.
Our experience is that every organization has different modeling structure, software, goals and culture. Foresight can understand your unique modeling goals and help align model management fundamentals with those goals.
Contact us to see how we can help with your model management challenges.