Model risk mitigation and cost reduction through effective documentation

This, A Closer Look, is the second in a series providing recommendations on mitigating model risks and improving the efficiency of varius model governance activities. The first, Model Risk Mitigation and Cost Reduction through Effective Design, focused on risk mitigation and cost reduction straregies targeted at model implementation and operation. Here we discuss regulatory requirements and leading practices around model documentation, and how high-quality documentation can help mitigate model risk and reduce model-related costs.