Innovative FinTech firm
Our team performed a validation of the labor market model to be used for credit applications. In addition to technical model validation, we have also advised the firm on the business model.
AI and ML models provide cutting-edge solutions with potentially large upside. However, they also exacerbate model risk due to their increased complexity. Although standard model validation frameworks can be applied to ML solutions, their specific risks need significant adjustments to the model validation framework.
Additional high-risk elements of ML models:
Alongside typical validation, our AI/ML validation contains the following specific components:
Our team performed a validation of the labor market model to be used for credit applications. In addition to technical model validation, we have also advised the firm on the business model.
Probability & Partners validated the ML model for credit scoring of the fintech start-up firm. We structured the validation as a “black-box” exercise to safeguard intellectual property. We also reviewed the business model given the ML model performance.
In today’s complex financial landscape, the integration of machine learning (ML) into risk management has unlocked unprecedented potential. At Probability & Partners, we’ve explored how Explainable AI (XAI) addresses different challenges across diverse risk domains, including credit risk, market risk, and operational risk.