How to Build Better Models to Avoid Model Risk
In this highly regulated and risk-focused environment, financial institutions are relying more on applying models to important procedures, such as identifying risk within the financial institution, and complying with regulatory reporting requirements.
However, using models can increase risk, since there are a number of factors that could cause them to be inaccurate and lead to financial loss.
In this article, you'll learn:
- What model risk is
- How to build better models
- How to verify your model's accuracy