Chugoku Bank and Mitsubishi Research Institute Begin Initiative to Advance Retail Risk Management and Build Sustainable Systems

Chugoku Bank (President: Sadanori Kato) and Mitsubishi Research Institute (MRI, President: Kenji Yabuta) have commenced an initiative to enhance risk management in Chugoku Bank's retail sector. This involves a partial review of estimation methods and the development of an analysis environment. Amidst significant changes in the financial and market environments, the objective is to achieve both advanced risk management and the establishment of a sustainable system that enables proper model operation and continuous improvement. Previously, Chugoku Bank faced challenges in adapting to future changes due to operating complex analysis methods in a fixed environment. MRI, with its extensive experience and knowledge in financial institution risk management, system construction, and consulting, will provide support. The initiative will proceed in phases, considering business impact. Key aspects include: reviewing estimation methods and organizing operational processes to standardize verification procedures, thereby reducing modification workload and enhancing transparency and explainability from a model risk management perspective; developing an analysis environment by constructing and integrating an open and scalable Python environment, including generative AI, to secure technical options and build a foundation for future functional expansion and talent acquisition; and strengthening the operational system to enable continuous verification and improvement, ensuring alignment with practical operations and adaptability to environmental changes. This collaboration will continuously advance as part of Chugoku Bank's risk management system development, with MRI continuing to support the refinement of analysis methods and operational systems.