These days, many of us find ourselves up late at night mulling over the potential implications of Dodd-Frank and Basel III. Questions such as, “How much risk is really out there, and who is holding it?” may be dancing in our heads. As we find ourselves older and wiser post-2008 crisis, we’ve come to see that in the past, many market practitioners have overlooked an important component of risk management: model risk. With all the new regulations out there targeting different aspects of financial risk management, just how important is model risk and, moreover, how do we frame it? “Model...