Credit Risk Measurement and Models: Model Risk
Interactive

Credit Risk Measurement and Models: Model Risk

Intuition Publishing
Updated Sep 25, 2020

Model risk arises because incorrect business decisions are made as a result of inaccurate model outputs or the inappropriate use of models. All models are subject to model risk because they involve simplifications and assumptions about the real world. Here we describe the main types of model risk and some of the ways in which model risk can be minimized. We also discuss the specific requirements of a robust model risk framework.