Author: Adrian Maconick, Director of UK Sales and Marketing

The Prudential Regulatory Authority (PRA) has issued a new supervisory statement (SS) – “Model risk management principles for banks” in May 2023. It sets out the PRA’s expectations for banks model risk management (MRM) and is effective from 17 May 2024. Banks will need to move quicky to have revised MRM processes in place by then.

The SS applies to all regulated UK-incorporated banks, building societies, and PRA-designated investment firms.

Anyone who has bought computer systems over the last 30 years has come up against the same dilemma – shall we go for a ‘best of breed’ packaged solution, or shall we build it internally, using the skills of the internal IT teams? It is the classic “Make or Buy” dilemma.

You talk about your requirements with IT. They look at the problem – it looks like a few database tables with a couple of front-end screens for data entry/update will do the job. Chuck in a couple of reports and hey - the job’s done. It won’t take more than a couple of months, tops. Surely that’s better than spending more money on what looks like an expensive solution from a vendor?