New Impairment Model: Governance Considerations

As banks prepare for the implementation of the current expected credit loss (CECL) model, governance in general and model governance in particular will take centre stage. 

Since CECL will have a direct impact on current period financial statements, banks especially will need to ensure the impairment processes and models used in allowance calculations are appropriate for that purpose. 

This white paper will review some of the most important model governance considerations, including how to approach new modeling needs, key differences between models for CECL and models for AIRB and DFAST, and the differing expectations for less complex banks.