Regulation — banking-specific
OCC Bulletin 2011-12 — Sound Practices for Model Risk Management
The OCC's companion to SR 11-7, written for national banks and federal savings associations. Same core discipline, held to a stricter examination standard by OCC teams who have been running model-risk exams against this text for over a decade.
What the bulletin actually says
"Banks should conduct a periodic review — at least annually but more frequently if warranted — of each model to determine whether it is working as intended and if the existing validation activities are sufficient. Such a review should consider whether changes in products, exposures, activities, clients, or market conditions require adjustment, redevelopment, or replacement of the model."
OCC Bulletin 2011-12 — ongoing-review requirement
"The rigor of model validation should be commensurate with the model's importance to bank decisions and its potential impact. … Independent validation should include process verification, outcomes analysis, and, where possible, benchmarking against alternative approaches."
OCC Bulletin 2011-12 — validation-scope requirement
What this means in plain English
For an AI credit-underwriting model at a national bank, the OCC expects:
- Periodic review at least annually — and more often when conditions change. Applicant-mix shift is a condition change.
- Independent validation with three legs — process verification (does the model do what its spec says), outcomes analysis (do the outputs match reality across borrower groups), benchmarking (does an alternative approach produce comparable results).
- Rigor scaled to importance. Credit-underwriting is a high-impact model class. The rigor bar is high.
What triggers the exposure in the sample
Applicant-mix shift + AI not retrained + no independent outcomes-analysis firing. The bulletin explicitly names client / market condition changes as a re-validation trigger. Marketing outreach into mixed lower-income zips grew the B3 share by 30% post-Day 45. That is a client-condition change. No re-validation ran. The OCC exam team asks for exactly this trigger record.
What the $499 Snapshot shows against this rule
- Outcomes analysis by borrower group — the leg the bank's annual validation cycle typically underweights
- Benchmarking against a distinct model family — the sensor is a different-math check
- Dated trigger record — when the condition change started, what fired, what was silent
- Signed independent-verifier declaration — the "independent" that the OCC exam team stress-tests
See how the Category-C determination is derived →
$499 Snapshot. 3 business days.
The independent-verifier record OCC exam teams are trained to ask for — before the exam entry-meeting lands.
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Snapshot credit applies to Baseline ($2,500) or Enterprise Attestation ($35-55K) upgrade within 30 days.