Banks and their regulators use financial models in a variety of areas including financial instrument valuation, market and credit risk measurement and control, and financial forecasting. Models are essential in managing large and complex institutions, and reliance on models that are inaccurate or inappropriate may lead to poor or costly decisions. For this reason, organizations should implement policies and procedures to ensure appropriate documentation and validation of all mission-critical and important models.
One of our financial institution clients, who knew the importance of using effective models in their business, wanted to mitigate risk within their models and contacted Baker Tilly.
The industry and risk professionals at Baker Tilly approached this project from a Valued Business Advisor perspective. They held a broad discovery and brainstorming session with the client to fully understand their financial models, discuss leading practices in the industry, and explore potential solutions.
With Baker Tilly’s assistance, the client planned and executed a comprehensive internal audit program. This included their business processes and internal controls related to certain financial instrument valuation requirements, system platforms and interfaces, and documentation requirements. A specialized Baker Tilly team was assembled based on the following skills necessary to provide the client with a comprehensive solution:
Some of the specific activities performed include:
Baker Tilly worked with the client throughout the project, shared insights, and transferred knowledge to their team. Results included:
For more information on this topic, or to learn how Baker Tilly banking specialists can help, contact our team.