I’ve been blogging about how increasing regulatory scrutiny is placing increased demand on bank analytic teams. Here's the rub: This burden is settling on analytics teams at exactly the moment when demand for their services—building more models to automate more decisions—is rapidly expanding.
Banking executives want their analytic teams to bring more powerful, complex analytics to market as quickly as possible. But they also need them to capture all the details and reasons along the way so that models and their usage are transparent and explainable to regulators, customers and executives.
Executives also want to get answers that allay their concerns about model risk. It’s not just potential financial and reputational damage from regulatory noncompliance that’s worrisome. It’s also the opportunity costs of delayed model deployments and bottom-line impacts resulting from decisions based on underperforming models.
That’s why it’s so critical to have automated, configurable workflow tools as part of your centralized model management infrastructure. Automated workflow reduces the friction of these additional requirements for the entire analytics team.
For model development: Workflow guides users through standard processes that document actions and decisions throughout the model lifecycle. It also orchestrates review cycles across departments, notifies stakeholders and ensures approvals are obtained before moving on to the next step.
For regulatory and internal reporting and inquiries: Workflow feeds data about model lifecycle processes into a centralized model management repository. Users compiling reports, preparing for audits or responding to queries work faster and more efficiently with this single source of all relevant information on models and modeling processes.Overall, this approach provides banks (and regulators) with complete visibility into how each model is developed, deployed and maintained. It ensures that the evidence banks need to explain and defend their analytic choices is always fully captured and readily accessible.