New interagency guidance issued on April 17, 2026, by the Federal Reserve, FDIC, and OCC redefines model risk management (MRM) for financial institutions. The updated framework emphasizes a risk-based, principles-driven approach, treating model risk with the same seriousness as credit or market risk. This necessitates clear tiering of models by materiality, proportionate controls, and robust end-to-end lifecycle governance for both classical machine learning and generative AI. AI
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IMPACT Financial institutions must adopt a more integrated and risk-based approach to governing all models, including GenAI, to comply with new regulatory expectations.
RANK_REASON New interagency guidance from major financial regulators redefines a key compliance area for the industry.
