Glossary
SR 11-7 (Model Risk Management)
The US Federal Reserve's model risk management guidance for banks.
Definition
SR 11-7 is the US Federal Reserve's supervisory guidance on model risk management, issued in 2011 and used to supervise banks' use of models. It requires banks to identify, measure, and control model risk through independent validation, ongoing monitoring, and clear governance.
Context
SR 11-7 sets the practical bar for AI/ML governance in US banking. Applying it to modern generative and agentic AI is an active area of regulatory guidance — the OCC and Federal Reserve have issued additional interpretive guidance on AI use in banking. Firms often extend SR 11-7 practices beyond banks (insurance, fintech) as the closest existing framework for AI accountability.