RAKBANK has appointed specialist analytics and risk management consultancy, 4most, to strengthen its model management practices. The partnership coincides with work 4most has started with further Tier One banks in the region.
This move comes in direct response to the Central Bank of the UAE’s (CBUAE) issuance of the Model Management Standards (MMS) and Model Management Standards (MMS) in December 2022, which laid out strict new guidelines to ensure the quality, consistency, and risk mitigation of models used by the country’s banks.
RAKBANK’s partnership with 4most began by conducting a thorough gap assessment to identify areas where the bank’s existing model management practices could be enhanced to meet the new regulatory standards. RAKBANK was active in driving the process, providing insights and feedback that were integral to shaping the assessment. Based on the findings, RAKBANK has collaborated with 4most to build a comprehensive roadmap aimed at elevating the bank’s model management framework.
Anuj Agarwal, Senior Vice President and Head of ERM at RAKBANK, comments:
“Our partnership with 4most is a valuable step in our journey to drive innovation in the UAE’s banking industry. The knowledge and skill of 4most’s team ensured that the process of developing a bespoke model management framework, which aligns with the complex regulatory landscape, was seamless.
“By combining our expertise and working with stakeholders across all levels of RAKBANK, we have been able to create a framework that streamlines and strengthens our compliance processes for the foreseeable future.”
Key components of the framework developed by RAKBANK and 4most included the Model Oversight Committee Terms of Reference, Model Development, Implementation, Validation, Monitoring, and Usage Standards, as well as detailed documentation covering all stages of the model lifecycle. These standards were designed to ensure compliance with the MMS and were customised to address the unique needs of RAKBANK’s operations.
In addition to developing the framework, RAKBANK worked with 4most in the validation of its retail and corporate credit risk models, which were under development. Utilising a parallel validation approach, RAKBANK and 4most were able to perform comprehensive validations at key milestones within the model development process, ensuring alignment with regulatory requirements and adherence to tight deadlines.
Prosenjit Paul, Client Partner at 4most, adds:
“It has been a pleasure to partner with RAKBANK to support this leading bank in meeting the new regulatory requirements of the MMF and MMS. Compliance with the new standard and framework is the focus of the moment for GCC banking institutions and we are delighted to be able to offer our extensive experience in all areas of the local and international model lifecycle, for all model types, to institutions facing these changes.
