The MMS are accompanied by the Model Management Guidance (“MMG”), which expands on technical aspects by model type. Both the MMS and MMG should be read jointly as they constitute a consistent set of requirements and guidance, as follows:
(i)
Part I of the MMS outlines general standards applicable to all models. They represent the key components of the Model Management Standards.
(ii)
Part II of the MMS outlines specific requirements for the application of the standards. Both Part I and Part II constitute the minimum requirements to be met by a model and its management process so that the model can be used effectively for decision-making.
(iii)
The MMG expands on technical aspects that are expected to be implemented by UAE banks for certain types of models. Given the wide range of models and the complexity of some models, the CBUAE recognises that alternative approaches can be envisaged on specific technical points. However, deviations from the MMG should be clearly justified and will be subject to CBUAE supervisory review.
1.3.2
The MMS is constructed in such a way that all points are mentioned sequentially and each point is a unique reference across the entire MMS. Throughout the document, the requirements associated with ‘must’ are mandatory, while those associated with ‘should’ are strongly recommended as they are regarded as robust modelling practice. The articles of the MMG are all articulated with ‘should’.
1.3.3
Both the MMS and the MMG contain an appendix summarising the main numerical limits included throughout each document, respectively. The summary is expected to ease the implementation and monitoring of these limits by institutions and the CBUAE.