medium · FRM Part 2 Current Issues
A bank calculates the Population Stability Index (PSI) to monitor an AI credit model. The distribution of scores has shifted such that the PSI is now 0.14.
What is the most appropriate governance response according to standard thresholds?
- Recalibrate the model's intercept only, since PSI measures calibration, not discrimination.
- The model should be immediately retired and replaced by a purely random classifier instead.
- Conduct a moderate shift investigation to determine if the model's training assumptions still hold.
- No governance action is required, since the model is deemed perfectly stable below the 0.25 threshold value.
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