Governance Briefing — July 17, 2024

Executive briefing: On 17 July 2024 the Bank of England’s Prudential Regulation Authority (PRA) published Policy Statement 11/24, confirming final model risk management principles for banks and insurers. Boards must set model risk appetite, oversee independent challenge, and ensure technology governance across AI, pricing, and stress-testing models.

Key governance signals

• Board ownership. Principle 1 assigns boards responsibility for approving model risk appetite statements and ensuring dedicated oversight committees.
• Lifecycle controls. Firms must maintain comprehensive inventories, validation routines, and issue management for every model class, including AI/ML deployments.
• Implementation timeline. PRA expects significant firms to meet the principles by 17 May 2026, driving multi-year governance programmes.

Action checklist

• Refresh board and risk committee charters to incorporate model risk governance, independent challenge responsibilities, and reporting cadences.
• Establish cross-functional model risk committees covering data, technology, and first-line ownership with defined escalation thresholds.
• Build remediation trackers for validation findings and model limitations, ensuring directors see progress against PRA timelines.

Sources

• PRA Policy Statement 11/24: Model risk management principles for banks
• Supervisory Statement SS1/24: Model risk management principles

Zeph Tech partners with UK boards to build model risk committees, AI governance inventories, and assurance evidence ahead of PRA deadlines.

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