Model validators squeezed by stress test deadlines
CCAR cycle frustrates compliance with Fed model risk guidance
Strict regulatory stress-testing deadlines are preventing banks from appropriately validating their scenario models.
Supervisory guidance on model risk management – known as SR 11-7 – requires banks to conduct annual reviews and validations of their models, including those used for the Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act Stress Test (DFAST).
But model risk experts say they often don’t have time to complete validations ahead of these annual stress tests
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