![]() ![]() The model risk taxonomy aims to capture the causes and manifestations of Model Risk in a systematic manner. Stability over Time: Risks can be assigned to appropriate risk types in a consistent way over longer time horizons.Definitional Clarity: To prevent overlap, at any level of the hierarchy, any type of model risk belongs to one and only one risk type.Granularity: The taxonomy has sufficient granularity to distinguish the different model risk types that have their own unique attributes.any type of model risk within the super-type belongs to one of the subtypes.the totality of model related risks aggregate to the super-type and.Comprehensive Coverage: At any level of the hierarchy the taxonomy must satisfy that. ![]() The high level requirements from a model risk taxonomy are not different from any other risk taxonomy Given the commonalities characterising model risks across domains it is more effective to focus on the first view. Hence the model risk taxonomy can be also considered as an additional risk sub-type within each category: for example model risks affecting credit risk
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