Model Inventory
From Open Risk Manual
Definition
A Model Inventory in the context of Risk Management is a database/MIS developed for the purpose of aggregating quantitative model related information that is in use by a firm or organization. Sometimes also called a Model Map.
Usage
An inventory of models is a tool supporting overall Model Governance, with a key objective identifying and managing Model Risk.
Issues and Challenges
- Establishing a comprehensive model inventory requires a sharp definition of what constitutes a model and this may be a non-trivial undertaking in organizations with large quantitative operations
- While the accumulation of a large set of models may create a sense that principles from Portfolio Management may be applicable (for example Risk Diversification, the very abstract and intricate nature of model risk requires caution.
