Large Bank Examination Workshop February 2026

Elements of Sound Validation Policy

Independent Review • The personnel performing model validation should be as independent as possible from the personnel who construct the model. • When comprehensive independence is not practicable, the policy should explicitly provide for an effective communication process between modelers and decision makers

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Independence • Validators may be internal staff, external consultants, or a combination of the two. • More complex models may warrant the engagement of third-party experts to supplement internal validations. • When internal staff validates a model, management must ensure that the staff is independent of the staff responsible for operating or using the model.

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