The National Bank of Georgia approves a new regulation to establish a high standard of risk management of statistical models in a financial institution
To encourage the proper use of the models and mitigate potential risks, the National Bank of Georgia has designed the regulation of data-driven statistical, AI, and machine learning model risk management. The purpose of this regulation is to establish a framework to ensure effective risk management. This regulation sets out the basic principles of model development, validation, and application. Model Risk Management standards take into account the existing practices and challenges of the Georgian financial sector and modern international supervisory experience. The document defines the National Bank of Georgia's authorities over the model risk management process. The requirements of the regulation are built on the proportionality principle and risk-based supervisory approach. Compliance with the requirements set out in the statute will be mandatory for all financial institutions.
The regulation is published on
the website of the National Bank at the following address:
https://www.nbg.gov.ge/uploads/legalacts/fin_teqnol/151_04210820.pdf (in Georgian)