The client, a mid-tier US bank, was using manual model monitoring processes for their marketing and risk management departments. The regulators, in external audit findings, pointed out errors in the model monitoring outcomes and it was mainly because of manual processes in place. The bank had an inventory of 20+ models across credit risk, market risk, stress testing etc., which were monitored by sub-teams. There was a clear opportunity for standardization and centralization through a single source model monitoring platform.
Lighthouse enabled model risk management solution
The Lighthouse enabled ‘System of Insights’ for the existing model inventory acted as a one-stop solution for the risk management team. It enabled executive level views and recommendations and report generation was made available at the click of a button. Model-level, deep dive validation analysis was made possible with Diagnostics like KS, Lift Curve and PSI etc. This AI/ML enabled tool acted as a workflow enabler and one-stop shop for all the regulatory model risk assessments. The impact were as following:
80% Efficiency and productivity gain through automated model monitoring
Regulatory compliance through resolution of audit reported findings for model risk management
Centralization & Standardization of model monitoring across the bank’s processes
