Regardless of purpose, all models in use need to be subject to an on-going monitoring and validation programme. Compliance under IFRS9 is assessed as part of an annual audit cycle. Better practice for the proper governance of all model types, including IFRS9, is for an independent validation programme to be incorporated into the overall governance framework. This is applied based on the organisation’s policy and risk appetite, as well as the materiality of the model. For high-volume and high-value decision models, such as mortgage originations models, validation as frequently as quarterly may be appropriate.
For clients who have developed their own suite of models and do not have the internal capacity or capability to conduct independent model validations, Connected Analytics offers on-going services to provide regular review of models as part of the overall governance framework. We review models to the defined internal standards, as well as external practices, and we do this from a truly ‘independent’ perspective. Validation will include the monitoring of qualitative and quantitative measures to determine the on-going fitness of a model for the purpose for which it was intended. This can also be extended to include participation in monthly or quarterly governance forums.
Connected Analytics Independent Model Validation services can be used as an external alternative to building and maintaining an internal, independent capability or to temporarily augment an in-house validation team during periods of high-demand.
Of course, Connected Analytics is unable to provide an independent validation service where we have participated in the model development programme.
This service is often provided as part of the following Solution Sets: