A model inventory for a large bank lists 400 models. Risk managers want to prioritize validation resources. Which factor should receive the HIGHEST weight in a model tiering framework?
Select an answer to reveal the explanation.
Short Explanation and Infographic
Here's the deal — c is correct because model tiering for validation prioritization is primarily driven by materiality — how significantly the model's outputs affect business decisions, financial outcomes, or customer impacts. High-materiality models receive more intensive validation.
Full explanation below image
Full Explanation
C is correct because model tiering for validation prioritization is primarily driven by materiality — how significantly the model's outputs affect business decisions, financial outcomes, or customer impacts. High-materiality models receive more intensive validation. A, B, and D are not primary drivers of risk tiering in SR 11-7 or industry frameworks.