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Why Automation Will Never Replace Judgment in Model Risk Management
Automation is reshaping model risk management, but it cannot replace human judgment. As models, regulations, and risks constantly evolve, overreliance on rigid tools can create new vulnerabilities. Effective MRM requires balance - using automation to support efficiency while preserving the flexibility, insight, and contextual decision making that only experienced risk professionals can provide.
Jan 30, 2026
Chandrakant Maheshwari, First Vice President - Model Validation Lead, Flagstar Bank
Tags:
Model risk
The views and opinions expressed in this content are those of the thought leader as an individual and are not attributed to CeFPro or any other organization
- Automation in MRM
offers efficiency but introduces new risks and rigidity
- Models regulations
and business priorities change too quickly for static tools
- Human judgment
remains essential for validation in volatile conditions
- Documentation
benefits from automation but requires continuous reassessment
- Overly complex
systems can reduce flexibility and adaptability
- First line
involvement is critical to realizing automation value
- High risk models
require judgment driven validation not calendar driven cycles
- Systemic model risk
cannot be managed through automation alone
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