Risk Model Monitoring & Refinement

3AI August 17, 2020

A Leading Mortgage Services Company

Problem Statement

• Ask was monitoring expertise which can help improve model monitoring structure. There were no standardized set of model monitoring parameters
• Model documentations were typically not available, in some cases the owners were also not known
• There was manual process of monitoring the models and producing PDF reports with immense man hours getting lost in the process

Analytics Led Approach

• A VBA-based dashboard was prepared which automated the entire process ,reducing the chances of error drastically
• It provided excessive ease of usability by avoiding multiple steps of fetching data , running codes, downloading data and chart creation
• The tool churned out ready to consume reports, which provided a snapshot of the health of the model for more informed decision making

Business Impact

• 80% reduction in manual effort by automating model performance report generation
• Ensured that business decisions were in line with the correct scoring definition
• Keeping the model variables relevant and at its optimal performance
• Overall impact of the tool
  • Total man-hours saved ~ 720
  • Dollar impact in the upwards of $ 300K

Critical Success Factors

• Standardization of the entire model monitoring process
• Removal of any kind of subjective decision
• Maintaining data integrity
• Timely compliance with regulatory requirements