Large Bank Examination Workshop February 2026

Model Approval • Models used for regulatory capital inputs or internal risk assessment and control and related activities should not, unless an exception has been granted and documented, be approved for operational use without undergoing independent review .

• Institutions should have a dedicated model risk committee or model approver for approving new models for use.

• Models with identified weaknesses or limitations may be recommended for conditional approval provided that compensating mitigations are in place.

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Validation • Once a model has been approved, its use should be subject to ongoing monitoring and review. • This process is called validation. • The objective is to verify that the model is performing as expected in line with its design objectives and business use. • Model owners and users have initial responsibility for validation. • All internal models and internal estimates should be subject to a thorough and consistent validation at least annually .

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