Detecting Red Flags: Model Risk and Validation Lessons Learned from Supervisory Findings

Michael Guglielmo

Managing Director

Darling Consulting Group

With over 30 years of experience in strategic risk management, Mike Guglielmo has provided technical and strategic consulting to a diverse group of financial institutions. Mike is also a frequent author and top-rated speaker on a variety of financial and operational risk management topics and serves as Finance Council Chairman and board member for the Financial Managers Society and as a faculty member of the Association for Management Information in Financial Services (AMIfs) Institute.

During his tenure at DCG, Mike has served in various capacities, including director of financial analytics. In addition, he is a technical resource for the ongoing development of many of DCG's quantitative and strategic risk management products and services. Prior to joining DCG, Mike managed the ALCO and strategic planning processes for a regional bank in the northeast. Mike is a graduate of Fairfield University with a degree in economics.

Description:

Recent supervisory findings include common missteps in model management and validation – from assumption/feeder model management, ongoing performance monitoring, model documentation and change control, to validation rigor, remediation follow-up, and the annual review process.

This session unpacks these notable trends, analyzes where institutions went wrong, and offers practical solutions to mitigate similar risks. Designed for MRM and validation practitioners, CROs, compliance teams, and audit functions, the session emphasizes proactive governance and audit-readiness.

Key Takeaways:

Review real-world MRAs, MRIAs, and DOR examples related directly and indirectly to MRM and validation failures.
Identify early warning signs and control gaps that can lead to regulatory issues.
Learn how to strengthen model documentation and governance reporting.
Understand how validation independence, transparency, and challenge should be applied.
Equip your MRM, internal audit, and compliance teams with targeted review strategies.