AI Model Risk Management Policy for Financial Firms

SR 11-7, SEC 2026 examination priorities, FINRA, DORA — one policy, all frameworks

Chief Risk Officers, Chief Compliance Officers, Model Risk Managers, and technology leaders at banks, investment advisers, broker-dealers, fintechs, and insurance companies operating in regulated financial markets.

Regulators across every major jurisdiction now treat AI model governance with the same rigor as quantitative risk models. The SEC’s 2026 examination priorities name AI as the #1 concern — ahead of cryptocurrency for the first time. Most firms have general AI policies but no model-specific framework that satisfies examiner expectations.

A complete AI Model Risk Management Policy covering: model inventory requirements, risk classification tiers, pre-development and development standards, independent validation requirements by risk tier, ongoing performance monitoring, data governance for training data, third-party vendor model oversight, adverse action explainability, and an AI incident response procedure.