Glossary
SR 26-2
The Federal Reserve, OCC, and FDIC's joint guidance on bank model risk management, issued April 2026 to replace SR 11-7.
SR 26-2 (Revised Guidance on Model Risk Management) is supervisory guidance issued jointly by the Federal Reserve, OCC, and FDIC on April 17, 2026. It governs how U.S. banking organizations identify, validate, monitor, and govern the models behind credit decisions, capital calculations, regulatory reporting, stress testing, and BSA/AML compliance, superseding SR 11-7 after fifteen years. It is voluntary guidance; non-compliance does not by itself trigger supervisory criticism.
The guidance requires a model inventory covering systems that meet its definition of a model; validation covering conceptual soundness, ongoing monitoring, and outcomes analysis; a risk-based validation cadence tied to a model's materiality and rate of change, rather than a fixed annual cycle; effective challenge from reviewers with the standing to question model design and use; clear accountability for model ownership and remediation; and governance over third-party models, with documentation adequate for independent review.
Generative and agentic AI systems are explicitly placed outside SR 26-2's scope. Institutions are still directed to govern them using the same underlying principles, materiality, ongoing monitoring, and effective challenge, even without a dedicated rulebook for these systems.