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Model Risk Management (MRM)

Model risk management (MRM) is the discipline of governing the risk that a model is wrong or misused — through inventory, independent validation, ongoing monitoring, and clear ownership. In US banking it derives from SR 11-7.


Classic MRM assumes a definable model with stable inputs and a measurable output. Agentic AI breaks that assumption — it is non-deterministic and acts across steps — and was placed outside the scope of revised US guidance (OCC 2026-13 / SR 26-02).

Governing agents therefore leans on frameworks like the NIST AI RMF and ISO/IEC 42001, plus validation over decision sequences, audit trails, and human oversight.

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Sources

  1. Federal Reserve SR 11-7, Guidance on Model Risk Management (Apr 2011)
  2. OCC Bulletin 2026-13 / SR 26-02, Model Risk Management: Revised Guidance (Apr 2026)