Model Risk Management Clause Samples

Model Risk Management. Where the Client utilizes a model as defined by OCC Bulletin 2011-12, “Sound Practices for Model Risk Management: Supervisory Guidance on Model Risk Management” to provide Bank sponsored Programs, the following apply: (a) Client shall maintain a documented Model Risk Management (“MRM”) Policy and program that assists Bank in adhering to its obligations relating to the oversight and management of risks related to the use of third-party models as outlined in the “Third Party Model and Data” section within the OCC Comptroller’s Handbook for Model Risk Management (Version 1.0, August 2021), as may be amended from time to time. Client will provide all current copies of the MRM Policy to the Bank. (b) Client must obtain Bank approval prior to utilizing or modifying a model to support any products which utilize any balance sheet activity provided by Bank as outlined in Schedule 6 of Exhibit A to the Agreement or as may be directed by any Regulatory Authority (each, a “Qualified MRM Product”). Such approval shall not be unduly withheld by Bank. (c) Client shall promptly deliver to Bank complete and correct copies of all of the items the Bank requires to perform its own initial and ongoing Due Diligence review of the model and respond to regulator inquiries. (d) Client agrees that to the extent that Bank determines that a model validation is required as it relates to Qualified MRM Products, Client shall select from a list of no fewer than three (3) Bank approved independent third-party providers to complete the model validation or, alternatively, in the event that Bank does not provide a list of three (3) or more Bank approved third-party providers, Client may propose an independent third-party provider to complete the model validation and Bank shall consider in good faith such provider. Bank shall retain final decision and authority regarding the scope of the model validation, as well as receive copies of all validation results, all reports, (including draft reports), and all exhibits and other documentation relied upon for the reports. Client shall be responsible for all expenses associated with the independent validation of models and will make Bank a third-party beneficiary of any model validation contract it enters into to complete a model validation required by Bank. (e) Client must resolve any identified MRM deficiencies within a commercially reasonable timeframe and manner collectively determined with the Bank or such shorter period as may be directed by a ...

Model Risk Management. (1) Within one hundred and eighty (180) days of the date of this Agreement, the Board shall submit to the Assistant Deputy Comptroller, for a prior written determination of no supervisory objection, revised policies and procedures to ensure effective BSA/AML model risk management for its automated suspicious activity monitoring system. Refer to OCC Bulletin 2011-12, “Sound Practices for Model Risk Management” for guidance. The policies and procedures shall ensure the Bank’s BSA/AML model risk management and validation are consistent with safe and sound practices and ensure effective implementation of all corrective actions in the Report of Examination dated as of March 31, 2018. At a minimum, the revisions must ensure: (a) periodic testing and tuning of existing parameters, with sufficient documentation supporting their appropriateness given the Bank’s products, services, and geographic markets, or supporting that the parameters need to be changed; (b) dual controls over rule adjustments and behavioral reviews, to ensure that changes are appropriate and that all changes are documented, including identification of the individuals making and approving any changes; (c) tuning of the suspicious activity monitoring system to customize customer settings in order to more accurately capture suspicious activity specific to each customer; (d) review of current wire transfer configurations to determine if they are appropriate to monitor for suspicious activity. The Bank must: (i) document and maintain supporting rationale for funds transfer configurations; (ii) conduct a detailed analysis to identify gaps within the model to monitor suspicious activity within funds transfers, relative to the risks of the loan products and customer base; and (iii) if the Bank’s suspicious activity monitoring system is unable to appropriately monitor for suspicious activity for wire transfers, the Bank must implement manual reports and processes to address this gap; and (e) within one hundred and twenty (120) days of the implementation date of the revised policies and procedures, an independent validation of the model used in the suspicious activity monitoring system conducted by a qualified, independent third party. As part of this validation, appropriate and qualified individuals must conduct outcomes analysis, to include the following: (i) integrity of data inputs from all products, services, and transactions, to include international and domestic wires; and (ii) evaluation of the a...

Model Risk Management. Within 60 days of the effective date of this Agreement, the Firm shall submit a written plan acceptable to the Reserve Bank to improve the Firm’s model risk management (“MRM”) governance and control practices across its U.S. Operations. The plan shall include the following six items:

Model Risk Management. Coastal shall approve and review models used by ▇▇▇▇ in the Program in accordance with ▇▇▇▇’s Model Risk Management policy, approved by Coastal. Coastal approval and reviews shall include governance of any models under the applicable model risk management requirements of Governmental Bodies or other regulatory authorities with supervisory authority over Coastal or ▇▇▇▇.

Model Risk Management. (a) To the extent that Affirm develops, implements and uses models for quantitative analysis and decision making in regard to the Program, prospective Applicants, or Applicants (collectively the “Model Risk Management Program”), Affirm shall cause the Model Risk Management Program to be developed and maintained in compliance with Applicable Law and Exhibit I. (b) Affirm shall provide such assistance to Bank that is reasonably necessary to allow Bank to understand the Model Risk Management Program. Affirm shall allow Bank to review, pursuant to the guidelines set forth in Exhibit I, (i) documentation of model development and independent model validation, (ii) ongoing monitoring of models and (iii) analysis of the effectiveness of models. (c) The Parties shall, during the term of the Program, review and analyze the models used in the Program to assess (i) model quality, conceptual soundness and reliability; (ii) whether the models reflect the Program’s underwriting criteria; (iii) whether the models consider fluctuations in economic cycles; and (iv) whether the models are operated in compliance with Applicable Law. (d) Affirm shall modify the models used in the Program as reasonably directed by Bank in accordance with Exhibit I and the SLA specified in Exhibit G.