Pillars

What Is Model Risk?

Model risk is the risk that a decision is wrong not because the underlying business or investment case was flawed, but because the model used to evaluate it was. It is a distinct category of risk from market risk, credit risk, or operational risk, and it applies to any organisation that relies on a financial model, spreadsheet or otherwise, to support a material decision. Most published model risk content addresses statistical and regulatory capital models used inside banks. This page defines model risk specifically as it applies to Excel based financial models, the kind used every day for investment decisions, lending, and transaction evaluation, which is a related but distinct problem from the quantitative model risk literature most search results return.

What Is a Financial Model Audit?

A financial model audit is an independent, structured examination of an Excel based financial model to confirm that its mechanics, logic, and outputs are reliable enough to support a decision. It is not a check of whether the assumptions are optimistic or conservative. It is a check of whether the model actually calculates what its author believes it calculates. Every year, lenders extend debt, investment committees approve capital, and boards sign off on transactions using numbers that came out of a spreadsheet nobody outside the immediate deal team has independently verified. A financial model audit exists to close that gap before it becomes expensive.

What Is a Project Finance Model Audit?

A project finance model audit is a financial model audit applied to the specific class of model used to finance infrastructure, energy, and long dated capital projects: debt sculpted, multi decade, cash flow driven structures with mechanics that do not appear in a typical corporate model. It is frequently a formal condition of financial close, not an optional check, and lender requirements for it exist almost entirely inside non public bank credit policy rather than any single consolidated public source. This page defines what makes project finance models structurally distinct, why lenders require independent verification of them specifically, and what the audit process looks like in this context.

What Is an AI Financial Model Audit?

An AI financial model audit is a financial model audit performed by an automated engine rather than a human reviewer working manually. Not every application of AI to financial models works the same way, and the distinction between approaches is not a marketing detail — it is the difference between an audit whose findings are repeatable and explainable, and one whose findings may not be. This page defines what an AI financial model audit is, the specific distinction between deterministic, rule-based audit and general-purpose generative AI review, and why that distinction determines whether an automated tool's output is suitable to support a material financial decision.

What Makes an Excel Financial Model Reliable?

An Excel financial model is a structured spreadsheet used to represent, calculate, and forecast the financial mechanics of a business, investment, or transaction. Reliability is not a function of how sophisticated a model looks; it is a function of its structure, discipline, and consistency. This page defines what an Excel financial model is, the structural characteristics that separate a reliable model from a fragile one, and the standards and terminology that underpin every other page in the FMAE Knowledge Centre that references a specific modelling concept. This is a crowded educational topic, and most existing content in this space is course marketing rather than a neutral reference. This page is written as the latter: a vendor neutral definition of reliable modelling practice, not a sales page for a training course.