Which of the following BEST describes the purpose of a model use li…

Question

Which of the following BEST describes the purpose of a model use limitation in a model risk management framework?

Accepted Answer

To define the approved scope of application within which the model's outputs can be relied upon — Here's the deal — b is correct because a model use limitation specifies the conditions, populations, geographies, or decision contexts within which the model's outputs are validated and approved for use — preventing extension of the model beyond its validated scope. A relates to system capacity.

Answer

To restrict the number of concurrent API calls the model can process

Answer

To limit the model's access to production databases for security purposes

Answer

To cap the financial exposure any single model can generate

Which of the following BEST describes the purpose of a model use limitation in a model risk management framework?

Short Explanation and Infographic

Full Explanation