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
Here's the deal — you should weight the materiality of decisions driven by the model's outputs highest because model tiering for validation prioritization is primarily driven by materiality. High-materiality models get more intensive validation.
Full Explanation
The materiality of decisions driven by the model's outputs 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. The age of the model since initial deployment, the programming language used to implement the model, and the size of the training dataset used to build the model are not primary drivers of risk tiering in SR 11-7 or industry frameworks.