Model Risk Management Validation Checklist

This comprehensive model risk management validation checklist ensures regulatory compliance with Federal Reserve SR 11-7, OCC 2011-12, FDIC, BCBS, CECL. Annual model risk management review for financial institutions covering model inventory, validation, governance, and limitation monitoring per Federal Reserve SR 11-7 guidance on Model Risk Management. Models used in credit scoring, stress testing, AML, pricing, and capital adequacy require rigorous governance to prevent model-driven losses and

• Industry: Financial Services & Banking
• Frequency: Monthly / Quarterly
• Estimated Time: 50 minutes
• Role: Compliance Officer / Branch Manager
• Total Items: 18
• Compliance: Federal Reserve SR 11-7, OCC 2011-12, FDIC, BCBS, CECL

Model Inventory and Tiering

Verify model inventory per SR 11-7 guidance.

• Is comprehensive model inventory maintained listing all models with owner, use, validation status, and tier?
• Have all models been tiered (high, medium, low) based on materiality, complexity, and business impact?
• Are new models reviewed and approved by Model Risk Management before deployment?
• Are vendor and third-party models included in inventory and subject to validation requirements?
• Are retired models documented and removed from active inventory with decommission date?

Model Validation Program

Verify validation per SR 11-7 three-component framework.

• Has model conceptual soundness (theoretical basis, methodology, assumptions) been documented and reviewed?
• Is ongoing model performance monitoring in place tracking model outputs against actual outcomes?
• Is outcomes analysis (backtesting) conducted at required frequency for each model tier?
• Is model validation conducted by personnel independent from model development and use per SR 11-7?
• Are high-tier models validated annually and lower-tier models per risk-based schedule?

Findings, Limitations, and Remediation

Verify finding tracking per SR 11-7.

• Are all model validation findings documented with severity rating and remediation owner?
• Are model-related Matters Requiring Attention (MRAs) from regulatory exams tracked to closure?
• Are known model limitations and compensating controls documented and disclosed to model users?
• Do remediation plans have defined timelines and are overdue findings escalated to senior management?

Model Risk Governance

Verify governance framework per SR 11-7.

• Is written Model Risk Management policy approved by board or senior committee and reviewed annually?
• Is Model Risk Committee or equivalent governance body overseeing model risk across the enterprise?
• Is aggregate model risk exposure reported to board or risk committee at least annually?
• Are DFAST/CCAR stress testing models subject to enhanced validation per Fed guidance?

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Why Use This Model Risk Management Validation Checklist?

This model risk management validation checklist helps financial services & banking teams maintain compliance and operational excellence. Designed for compliance officer / branch manager professionals, this checklist covers 18 critical inspection points across 4 sections. Recommended frequency: monthly / quarterly.

Ensures compliance with Federal Reserve SR 11-7, OCC 2011-12, FDIC, BCBS, CECL. Regulatory-aligned for audit readiness and inspection documentation.

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