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Model risk management

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The banking-supervision practice of validating models for conceptual soundness, monitoring and outcomes analysis under effective challenge. SR 11-7 set the US tradition until SR 26-2 superseded it on 17 Apr 2026 1, and SR 26-2 leaves generative and agentic AI models out of its scope 2. A neighbour of this discipline, extended here to runtime behaviour and agents.

Developed in
ch. 14, Independent validation and model risk management
ch. 21, Sector rules that already reach AI
ch. 01, The disambiguation cluster
Chapters
ch. 01, Definition · ch. 02, Why Now · ch. 13, Risk Management · ch. 14, Development · ch. 21, AI Laws Worldwide
Contrast with
Risk management
Source
2 numbered references, listed below

Where it is used

6 chapters of the Body of Knowledge use the term. Each link opens the first section that does.

  • Effective challenge

    Critical analysis of a model by objective experts with the expertise, independence and organisational standing to force change.

  • Agent (agentic AI)

    An AI system that acts (browses, executes code, calls APIs, moves data or delegates to other agents) under delegated authority, rather than only producing text.

Sources

  1. [1] SR 26-2, Revised Guidance on Model Risk Management (issued 17 Apr 2026 by the Federal Reserve, OCC and FDIC; supersedes and replaces SR 11-7 of 4 Apr 2011 and SR 21-8; effective challenge). Board of Governors of the Federal Reserve System. 2026-04-17. https://www.federalreserve.gov/supervisionreg/srletters/SR2602.htm (verified: primary)
  2. [2] Revised Guidance on Model Risk Management, attachment to SR 26-2 (footnote 3: generative AI and agentic AI models "are not within the scope of this guidance"; the principles apply to traditional statistical and quantitative models and non-generative, non-agentic AI models). Federal Reserve, OCC and FDIC. 2026-04-17. https://www.federalreserve.gov/supervisionreg/srletters/SR2602a1.pdf (verified: primary)

Definitions of legal terms paraphrase the cited text, which governs. Dated statements are as of .

Cite this term

García Aibar, J. (2026). Model risk management. In AI Governance Engineering: The Thesis & Body of Knowledge (v0.5.0), Glossary. https://doi.org/10.5281/zenodo.22956197. https://aigovernanceengineer.com/glossary/model-risk-management. CC BY 4.0

BibTeX

@misc{aige2026modelriskmanagement,
  author  = {Jorge García Aibar},
  title   = {{Model risk management}},
  note    = {Glossary, AI Governance Engineering: The Thesis \& Body of Knowledge, version 0.5.0},
  year    = {2026},
  doi     = {10.5281/zenodo.22956197},
  url     = {https://aigovernanceengineer.com/glossary/model-risk-management}
}