Large Bank Examination Workshop February 2026

Rationale for Modeling

Modification/ Decommission

Model Development

Model Lifecycle

Ongoing Monitoring and Review (Validation)

Independent Review (Vetting)

Model Approval

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Statement of Purpose • Model users should develop an economic or business rationale for developing a new model or for changing an existing model. • Model owners should understand the purpose of the model and ensure that modeling choices are properly documented . • This should be discussed and developed into a model “statement of purpose” containing:  why the model is being built,  what business problem it addresses, and  how it will be used. • It sets the scope, objectives, and intended outcomes of the model before any technical work begins • Evidence must be provided on the suitability of the model for the proposed purpose (e.g. by comparison with other candidate models that could be used or are used for the same purpose).

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