The FDIC issued FIL 22-2017 in June 2017, what does it imply?

The Federal Deposit Insurance Corporation (FDIC) issued Financial Institution Letter (FIL) 22-2017 to provide supervisory guidance on model risk management. The document explicitly addresses its applicability to smaller institutions by setting an asset-based threshold. It states that the guidance is generally not expected to apply to FDIC-supervised institutions with under $1 billion in total assets. However, it includes a crucial exception: the guidance would still pertain to such an institution if its use of models is significant, complex, or poses an elevated risk.

A. This option is incorrect; the asset threshold mentioned in the official guidance is $1 billion, not $3 billion.

C. While periodic review and tuning of typologies is a best practice in model risk management, it is not the specific implication of FIL 22-2017 regarding its scope.

D. This is a general definition related to model risk management, not the specific guidance on applicability provided in FIL 22-2017.

1. Federal Deposit Insurance Corporation (FDIC). (2017, June 7). FIL-22-2017: Supervisory Guidance on Model Risk Management. Introduction, p. 1. Retrieved from https://www.fdic.gov/news/financial-institution-letters/2017/fil17022.html. (The document states, "It is not expected that this guidance will pertain to FDIC-supervised institutions with under $1 billion in total assets unless the institution's model use is significant, complex, or poses an elevated risk to the institution.").