Establishing Model Risk Management
http://ccro.org © Copyright 2025, CCRO. All rights reserved. 18
6. Conclusion
The value of a well-defined MRM program extends beyond regulatory compliance. The CCRO
acknowledges and observes a paradigm where institutions look to MRM to drive value through
reduced operational risk and higher overall value creation. Superior data quality, proper
process controls, robust algorithms, advanced analytics, engaged oversight, and continuous
improvement shall be the supporting forces.
The CCRO recognizes the challenges facing the industry and believes that an effective MRM
program is essential for building, understanding, and developing trust in the new models
needed for emerging areas and difficult markets. This paper provides an overview of the MRM
framework along with recommended practices that the CCRO suggests its members consider
for implementation. This document should be seen as a starting point in the continuous effort to
enhance the energy industry’s approach to model risk management, as well as a set of
recommendations for companies to consider regarding the MRM framework best suited to their
specific needs.
Lastly, the CCRO notes that there is no regulatory compulsion for model risk management in
the energy industry as there is in banking. Similarly, there is no model risk standard that
companies are beholden to. The recommendations in this white paper are explicitly for
companies to review industry practice and determine which framework components and MRM
activities best fit their own risk needs.
http://ccro.org © Copyright 2025, CCRO. All rights reserved. 18
6. Conclusion
The value of a well-defined MRM program extends beyond regulatory compliance. The CCRO
acknowledges and observes a paradigm where institutions look to MRM to drive value through
reduced operational risk and higher overall value creation. Superior data quality, proper
process controls, robust algorithms, advanced analytics, engaged oversight, and continuous
improvement shall be the supporting forces.
The CCRO recognizes the challenges facing the industry and believes that an effective MRM
program is essential for building, understanding, and developing trust in the new models
needed for emerging areas and difficult markets. This paper provides an overview of the MRM
framework along with recommended practices that the CCRO suggests its members consider
for implementation. This document should be seen as a starting point in the continuous effort to
enhance the energy industry’s approach to model risk management, as well as a set of
recommendations for companies to consider regarding the MRM framework best suited to their
specific needs.
Lastly, the CCRO notes that there is no regulatory compulsion for model risk management in
the energy industry as there is in banking. Similarly, there is no model risk standard that
companies are beholden to. The recommendations in this white paper are explicitly for
companies to review industry practice and determine which framework components and MRM
activities best fit their own risk needs.
