Governance
Effective Challenge
Independent critical analysis capable of identifying model limitations.
Definition
Critical analysis by objective, informed parties who can identify model limitations and assumptions, and produce appropriate changes. A key principle in model risk management requiring independent review of models.
Source
- •SR 11-7
Related Terms
Independent Validation / Peer Review
Objective review of model assumptions and performance....
Model Documentation
Records of model development, assumptions, and validation....
Model Risk
Risk of adverse consequences from incorrect or misused model outputs....
Model Validation
Processes to verify models perform as designed....
Model Risk Management (MRM)
Lifecycle controls for development, validation and use of models....