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It involves answering a question with regards to a particular company named as AAR CORP (NYSE:AIR) and required a detailed research and the answer needs to be very precise and to the point.The...

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It involves answering a question with regards to a particular company named as AAR CORP (NYSE:AIR) and required a detailed research and the answer needs to be very precise and to the point.The question is:
Model risk frameworkYou need to address the following as part of your analysis:• Explain the concept of model risk. • Identify and discuss various ways in which model risk can arise. • Recommend an appropriate risk management process to deal with any future financial product proposals including the discussion of appropriate processes and controls

The answer need to be written in one one page nearly XXXXXXXXXXwords and a company which can be taken for comparison isTextron Inc. (NYSE:TXT)
Answered Same Day Dec 27, 2021

Solution

Robert answered on Dec 27 2021
109 Votes
In today’s world business plan, cash flow plan and business plan and financial models are one
of the important measures to asses and plan the future strategies of the business.
There is substantial amount of risk associated with these financial models because these
financial models are based on certain assumptions and if the assumption is violated which
happens quiet frequently in real life scenario, then the strategy of the firm will not be aligned
with its financial planning and firm can incur future cash flow problems.
Thus the risk associated with the failure of financial model is called the model risk. Model
isk can...
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