Intrinsic Model Risk is a challenge with every risk system. The more complex the model, the higher the potential model risk.
Extrinsic Model Risk, caused by input data errors and model configuration mistakes, can compound model risk significantly and cause severe distortions to risk optics.
Model Risk Mitigation
By minimizing Extrinsic Model Risk, Red Swan improves the veracity and confidence of risk reporting.
Ongoing Challenge of Model Risk Management
Maintaining optimal performance requires constant vigilance and responsiveness to prevent excessive model risk from creeping back into reports.
Red Swan services provide ongoing maintenance, monitoring, diagnostics, and timely mitigation required to manage model risk effectively.