ERM Glossary: Model construction risk

[this page | pdf | references | back links | custom searches]

This is a type of model risk and is the risk that although our underlying model framework is sound we somehow introduce errors in how it is actually constructed. Quantitative models usually involve the application of mathematical algorithms, which are often implemented using spreadsheets or other types of computer software. Model construction risk may therefore be mitigated in part by adopting appropriate Information Technology (IT) disciplines.


Contents | Prev | Next

Desktop view | Switch to Mobile