model risk

Model risk is a growing concern in financial services, particularly as asset managers adopt artificial intelligence faster than they build governance frameworks. The Dutch Authority for the Financial Markets (AFM) warns that AI is being used for research, portfolio analysis, trading decisions, and operational workflows without adequate controls to ensure safety, explainability, and accountability. This gap between AI adoption and governance creates model risk that regulators now treat as a supervisory priority. Discussions on WindowsForum highlight the tension between technological enthusiasm and the need for robust model risk management, emphasizing that model risk is not just a technology issue but a governance challenge requiring attention from enterprise IT and compliance teams.