Model Risk

Model Risk

Risk occurring when the financial model used to evaluate the firm’s market risks or value transactions fails to fulfill the tasks or identify the risks it is expected to. Considered a subset of operational risk, because it affects the firms that use the model.

Related posts:

1. Index Model
2. Value-at-Risk Model (VAR)
3. CAPM Capital Asset Pricing Model
4. Market Model
5. Multi-Factor Model