A bank's AI model governance policy requires all high-risk models to undergo independent validation before production deployment. An internal validation team reports that the fraud detection model passes performance benchmarks. However, the team that built the model also performs ongoing monitoring. Which governance gap does this reveal?
Select an answer to reveal the explanation.
Short Explanation
Here's the deal — if the team that built the fraud model also handles ongoing monitoring, you've broken the independence principle. SR 11-7 expects validation and monitoring to stay independent from model developers, so the same team doing both creates a conflict of interest.
Full Explanation
The governance gap is that ongoing monitoring performed by the development team violates the independence principle required for effective model oversight. SR 11-7 explicitly requires that model validation be conducted by staff independent of model development and that ongoing performance monitoring also maintain independence from the model builders. When the same team builds and monitors a model, they have an inherent conflict of interest that undermines the control. The fairness-testing option may be a separate gap but is not what is described. The external-third-party option is not required; internal validation is acceptable if properly independent. The medium-risk recategorization option is a risk avoidance strategy that would not resolve the independence problem.