Regulatory Alerts2024-08-21
Management of Model Risk
The Banking Supervision Department of Israel issued Proper Conduct of Banking Business Directive 369 to establish comprehensive requirements for model risk management within banking corporations and payment service providers. The Directive mandates that institutions manage model risk through rigorous corporate governance, stringent development and application processes, and independent validation, explicitly extending these obligations to Artificial Intelligence models. It replaces previous guidelines and sets a compliance deadline of August 21, 2025, with phased implementation schedules for existing models based on their materiality.
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