What is SR 11-7, and what replaced it?
By Nick Jang, founder of MINERVA Studio ·
The short answer
SR 11-7 was the Supervisory Guidance on Model Risk Management issued by the US Federal Reserve and the OCC on 4 April 2011, later adopted by the FDIC. For fifteen years it was the reference for model risk management worldwide. On 17 April 2026 the three agencies replaced it with SR 26-2, revised interagency guidance that also supersedes SR 21-8 on anti-money-laundering models.
What SR 11-7 required
SR 11-7 (the OCC issued the same text as Bulletin 2011-12) defined a model as a quantitative method that applies statistical, economic, financial or mathematical theories to process input data into quantitative estimates, with an input, a processing and a reporting component. Its framework had three pillars:
- Model development, implementation and use: sound design, data and testing, with documentation detailed enough for someone unfamiliar with the model to understand it.
- Model validation: an independent review with three core elements, evaluation of conceptual soundness, ongoing monitoring, and outcomes analysis including backtesting.
- Governance, policies and controls: board and senior management oversight, a model inventory, clear roles, and internal audit.
The idea people quote most is effective challenge: critical review by people who are independent, competent and senior enough that the model owner has to listen. SR 11-7 also said model risk should be managed like any other risk, with a view across all models rather than one at a time, and that vendor models didn’t get a pass.
SR 26-2: what changed in April 2026
SR 26-2, Revised Guidance on Model Risk Management, was issued on 17 April 2026 by the Federal Reserve, the OCC (as Bulletin 2026-13) and the FDIC. Its cover letter says it supersedes SR 11-7 and SR 21-8, reflects about fifteen years of supervisory experience and industry feedback, and is most relevant to banking organizations with more than US$30 billion in assets, while scaling to each institution’s size, complexity and model risk profile.
Commentary since publication describes it as more risk-based and materiality-driven and considerably shorter than SR 11-7, keeping the core expectations on development, validation, monitoring, governance and third-party models. Commentators disagree on how far its formal scope reaches generative and agentic AI, so read the guidance document attached to the letter rather than a summary of it.
If a policy, contract or job description still cites SR 11-7, it now points to withdrawn guidance. Update the reference to SR 26-2, or for Canadian institutions to OSFI E-23.
SR 11-7, SR 26-2 and OSFI E-23 compared
| SR 11-7 | SR 26-2 | OSFI E-23 | |
|---|---|---|---|
| Issued by | Federal Reserve and OCC (FDIC from 2017) | Federal Reserve, OCC and FDIC | OSFI (Canada) |
| Date | 4 April 2011 | 17 April 2026 | Final 11 Sept 2025; in effect 1 May 2027 |
| Status | Superseded | Current in the US | Current in Canada |
| Who | US banking organizations | US banking organizations, most relevant above US$30 billion | Every Canadian federally regulated financial institution, insurers included |
| AI and machine learning | Not addressed by name | Read the guidance for scope | Named inside the definition of a model |
| Inventory fields | Inventory expected, fields not listed | Inventory expected | Fields set out in Appendix 1 |
For a Canadian bank with US operations, both apply in their own jurisdiction. The good news is that the core is shared: an inventory, a risk rating, independent review, approval and monitoring. A single record that holds those can answer either regulator; see our E-23 guide.
Related questions
When was SR 11-7 published?
On 4 April 2011, by the Federal Reserve and the OCC (as OCC Bulletin 2011-12). The FDIC adopted it in 2017.
Is SR 11-7 still in effect?
No. SR 26-2, issued on 17 April 2026, supersedes SR 11-7 and SR 21-8.
What is SR 26-2?
Revised interagency guidance on model risk management from the Federal Reserve, OCC and FDIC, issued on 17 April 2026, replacing SR 11-7.
What is SR 11-7 compliance?
The term meant meeting SR 11-7’s expectations on development, validation and governance. Since April 2026 the reference point in the US is SR 26-2.
Does SR 11-7 apply in Canada?
No. Canadian federally regulated institutions follow OSFI’s E-23. Many Canadian banks used SR 11-7 as a reference because of their US operations.
Sources
- Federal Reserve — SR 26-2, Revised Guidance on Model Risk Management (17 April 2026)
- Federal Reserve — SR 11-7, Guidance on Model Risk Management (4 April 2011)
- OSFI — Guideline E-23, Model Risk Management (2027)
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A plain-language explanation, not legal advice. The regulator’s own text is the source; read it, and take advice on how it applies to your institution.