Which items are typically documented to support governance of Monte Carlo models?

Which items are typically documented to support governance of Monte Carlo models?

• A. Auditable code as the only item.
• B. Documentation should include input distributions, data sources, model structure, algorithms, validation results, and caveats.
• C. Personal notes from developers.
• D. None of the above.

Answer: (B)

Documenting Monte Carlo models is essential for governance because it makes how the model works transparent and verifiable. The documentation should cover input distributions, data sources, model structure, algorithms, validation results, and caveats. This combination supports reproducibility, auditability, and clear understanding of assumptions and limitations, which are crucial for risk management and regulatory checks. Relying on auditable code alone misses the broader context of inputs, data provenance, and testing, while personal notes from developers are informal and not suitable for formal governance. Including the documented items ensures a complete, traceable record of the model and its behavior.

Documenting Monte Carlo models is essential for governance because it makes how the model works transparent and verifiable. The documentation should cover input distributions, data sources, model structure, algorithms, validation results, and caveats. This combination supports reproducibility, auditability, and clear understanding of assumptions and limitations, which are crucial for risk management and regulatory checks. Relying on auditable code alone misses the broader context of inputs, data provenance, and testing, while personal notes from developers are informal and not suitable for formal governance. Including the documented items ensures a complete, traceable record of the model and its behavior.