# Model risk management · Glossary
The framework for identifying, validating, monitoring and controlling the risk that a model is wrong, misused or no longer fit for purpose.
[Glossary](/glossary) · AI governance and risk

# Model risk management

     The framework for identifying, validating, monitoring and controlling the risk that a model is wrong, misused or no longer fit for purpose. It covers statistical models, machine-learning systems and, increasingly, generative AI components.

## Why it matters

     Models now influence pricing, credit, fraud, triage and resource allocation. When a model fails, the consequences can be financial, regulatory or harmful to individuals, and they often go unnoticed until outcomes have already been affected.

     In UK banking, the PRA’s supervisory statement SS1/23 sets out model risk management principles, and the same disciplines are useful well beyond regulated banks: a model inventory, proportionate validation, clear ownership, ongoing monitoring and a process for decommissioning.

## In practice

     For example, a UK specialist insurer using several pricing and claims models might tier them by consequence, require independent validation for the highest tier before each release, and review monitoring reports quarterly with a named owner who can restrict or withdraw a model.

## Where Rodan fits

     Rodan builds validation, monitoring and documentation into the models it delivers through [AI and Decision Systems](https://rodan.io/what-we-build/ai-decision-systems). See also [how to think about AI risk in a regulated industry](https://rodan.io/insights/how-to-think-about-ai-risk-in-a-regulated-industry).

## Related terms

- [AI inventory](/glossary/ai-inventory)

- [Model card](/glossary/model-card)

- [Model drift](/glossary#model-drift)

- [AI governance](/glossary#ai-governance)

- [Audit trail](/glossary/audit-trail)

- [Model registry](/glossary/model-registry)

- [NIST AI Risk Management Framework (AI RMF)](/glossary/nist-ai-risk-management-framework)
HTML: https://rodan.io/glossary/model-risk-management