---
title: "Model risk management"
description: "The banking-supervision practice of validating models for conceptual soundness, monitoring and outcomes analysis under effective challenge."
canonical: https://aigovernanceengineer.com/glossary/model-risk-management
author: "Jorge García Aibar"
license: "CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/)"
doi: https://doi.org/10.5281/zenodo.22956197
version: "0.5.0"
updated: 2026-09-25
---

# Model risk management

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 SR 11-7 set the US tradition until SR 26-2 superseded it on 17 Apr 2026 [1], and SR 26-2 leaves generative and agentic AI models out of its scope [2].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](https://aigovernanceengineer.com/bok/governing-development#independent-validation-and-model-risk-management); [ch. 21, Sector rules that already reach AI](https://aigovernanceengineer.com/bok/ai-laws-worldwide#sector-rules-that-already-reach-ai); [ch. 01, The disambiguation cluster](https://aigovernanceengineer.com/bok/definition#the-disambiguation-cluster)
- Chapters: [ch. 01, Definition](https://aigovernanceengineer.com/bok/definition) · [ch. 02, Why Now](https://aigovernanceengineer.com/bok/why-now) · [ch. 13, Risk Management](https://aigovernanceengineer.com/bok/risk-management) · [ch. 14, Development](https://aigovernanceengineer.com/bok/governing-development) · [ch. 21, AI Laws Worldwide](https://aigovernanceengineer.com/bok/ai-laws-worldwide)
- Contrast with: [Risk management](https://aigovernanceengineer.com/glossary/risk-management)
- In the glossary chapter: https://aigovernanceengineer.com/bok/glossary#t-model-risk-management

## Sources

[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] 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)