Governance
Model Risk Management (MRM)
Model risk management (MRM) is the framework banks and insurers use to validate, monitor, and govern statistical and AI models that affect consequential decisions. Canadian OSFI Guideline E-23 and US Federal Reserve SR 11-7 are the dominant frameworks. AI deployments in regulated finance need an MRM-aligned validation report, ongoing performance monitoring, and clear human-in-the-loop boundaries before they touch any decision affecting consumer credit, insurance, or capital.
Related terms
- AI Governance — AI governance is the system of policies, controls, and accountabilities that determines what AI is allowed to do inside an organization, who approves AI deployments, how AI decisions are audited, and how risk is managed.
- AI Compliance — AI compliance is the demonstrable conformance of AI deployments to applicable laws and standards — GDPR, PIPEDA, the EU AI Act, NIST AI RMF, ISO/IEC 42001, sector-specific rules in healthcare, finance, and government.