SMALL VALIDATION TEAM
Instead of hiring more people and expanding the team, the bank wanted to focus on making its processes more efficient.
IRB models, in particular, require the same tests to be performed with some periodicity. The bank wanted to free up time to focus on SME tasks and quantitatively more challenging work through automation.
IRB models require regular validation cycles that include reporting the outcomes to the regulator. To comply with such requirements, the validation team often has to go back in time and reproduce specific outcomes.
One of the leading Belgian banks created a Model Risk Management framework applicable to credit risk models. It was looking for a technology to streamline its model validation process and make it more efficient. The bank faced capacity constraints as it expanded its model inventory. Validation backlogs and delays mounted as the small validation team struggled to cover expanding validation requests and address regulatory requests.
The Belgian bank chose a SaaS deployment of the Chiron App to automate and significantly shorten the validation process. Its model validation team uses the Chiron App to validate Credit Risk models such as Probability of Default (PD) and Loss Given Default (LGD).
The Chiron App helps the model validation team to make the validation processes more efficient, reduce time spent on repetitive activities, and facilitate regulatory reporting. More frequent and comprehensive testing was made possible, while SMEs could focus on quantitatively challenging work.
The time spent on repetitive tasks has been reduced by a factor of 10. This means the team now has the time to carry out more in-depth analyses, deep-dives into the data, and validate other types of models.
Through versioning and keeping the linkage between Model Risk Management objects in the Chiron App, the internal validation unit can quickly go back in time, reproduce results, and respond to questions from regulators.
The bank can spend more time on in-depth quantitative analyses and investigation of model issues. The Chiron App lets it source data independently (from the first line) and gives it control over the entire cycle.
The Chiron Advantage
The Chiron MRM technology is the first AI-driven end-to-end model risk management platform consisting of two technologies: The Chiron App & Chiron Enterprise. Both platforms have been developed with all the functionalities and flexible capabilities needed to accelerate and scale model risk management projects effectively.
The Chiron App has been designed to automate and standardise manual and repetitive tasks within the model validation process from testing to monitoring, resulting in considerable cost and time savings. All environments are fully managed within the platform, removing the need to manage Python environments and multiple libraries individually. More importantly, the Chiron App records all validations and specifications together with full details of users and changes to enable organisations to stay compliant.