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Model Risk Management for Spreadsheets

Model Risk Management and Spreadsheet Governanace (SR11-7)

Model Risk Management

Over the past ten years, financial institutions have enhanced their Enterprise Risk Management (ERM) practices in response to both internal and external influences whether they be historical, regulatory or simply the result of enhanced data and technological capabilities. The management of complex financial and predictive models which are either developed entirely in spreadsheets or are reliant upon related spreadsheet models, is a critical component of a successful ERM strategy.

Apparity Impact

Apparity enables a bank or an insurer to provide critical process automation and spreadsheet model lifecycle controls, while also delivering the detailed oversight needed by both external and internal audit teams. The platform ensures compliance with the latest guidance issued by regulators and the governance mandates of executive management.

Case in Point, Non Cosmetic Change to High Risk Spreadsheets

Whether dealing with complex spreadsheet models in an Investment Bank or in a corporate actuarial department, all changes that directly affect the model results or links to other spreadsheets should follow an established change control process.

Spreadsheet Model Change should be documented at all stages of development from inception to production. The change process must involve a clear separation of roles and responsibilities between the users involved in actually designing, owning and updating the spreadsheet model and the managers who are responsible for the process of reviewing and approving any material changes made to the file. Moreover, when in production the actual change process needs to be tightly controlled but must not interfere with the day to day operations of the company.

Operating within the native Excel session the Apparity ‘In-Change’ process is designed to provide a comprehensive set of workflow events and controls that ensure all material / non-cosmetic changes are fully documented, tracked and approved at every stage of the model change process.

In-Change Ribbon

By clicking on the ‘In-Change’ icon the user initiates the process and is immediately presented with a form that requires him / her to document what changes are going to be made, how they are going to be tested and what areas of the business will be impacted by the change(s). This form is easily customizable to accommodate the unique demands of different organizations.

In-Change Form

Once completed and submitted Apparity begins the ‘In-Change’ process by first notifying the process manager assigned to approve material changes that a request has been made and by also generating an ‘In-Change’ copy / version of the spreadsheet that is saved to a dedicated folder. This allows the model to be safely updated and tested without impacting the operation or the integrity of the current production version.

Typically the In-Change process has three discrete points of control: First, the documentation and approval of what changes need to be made. Second, the review and approval of the actual changes made. Third, the final sign off and the publishing of the new model into the production folder.

Pending Changes

During all stages the Apparity workflow engine ensures the appropriate approvals are provided before transitioning to the next stage and tracks the updates, significant changes, progress and decisions – all available in real-time in the Apparity Version History pane.

The screenshot below illustrates the discrete stages of change with the key control documentation, review, approval and publishing events clearly identified

Published History






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