Model Risk

Going Beyond Compliance for Better Business Management

Sophisticated financial models drive decision making and are an essential part of a robust risk management framework. However, the potential failures and misuse of these models can present large risks to your business; erroneous guidance from an inaccurate model can lead to lost opportunities and unforeseen exposures. With this in mind, investors, board members and regulators have heightened scrutiny on model use, governance and assumptions. Periodic model validations can help you mitigate model risk, address this scrutiny and make more confident decisions.

Analyzing and assessing the degree of model risk requires complete independence, high levels of modeling experience and expertise, and the comprehensive means to prove out the model's potential and actual capabilities.

Asset Liability Management Model Validation

Our validation service establishes the high levels of business and regulatory confidence needed to fully use an ALM model as a performance management and risk analysis tool.

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Model Positive Affirmation

Model users must be confident that the fundamental forecast capabilities of their model are accurate. MountainView's model positive affirmation service provides an independent assessment of model capabilities. This service does not take the place of the validations required of individual models, but it does provide a firm foundation upon which to both judge a model and verify its specific implementation.

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Capital Stress Test Model Validation

MountainView's capital stress test model validation services ensure that all dimensions of your CST model's implementation, conceptual design and development, technical and statistical correctness, outcomes accuracy and controls are effectively challenged and affirmed, and empower you to meet your DFAST and CCAR compliance and capital management requirements. We support all types of capital stress test (CST) models including internally-developed credit loss, PPNR, and capital reporting models, as well as vendor-based aggregator models supporting both DFAST and CCAR applications.

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Liquidity Risk Management

Following the financial crisis, there has been heightened scrutiny on liquidity risk management and the process for measuring, monitoring and managing liquidity. This additional scrutiny includes the development of metrics to monitor as well as development and review of comprehensive contingency plans for potential liquidity events. MountainView's liquidity risk management services assess your risk management process to confirm that it meets your business needs and covers your regulatory mandates (FRB SR 16-3 and FRB SR 10-6) and preparedness to identify and manage potential liquidity events.

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Validation of Additional Financial Models

We also frequently validate a number of different types of models for our clients, including models used for allowance for loan and lease losses (ALLL) analysis, mortgage servicing rights, loan prepayment analysis, deposit analysis and mortgage pipeline management.

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