Large Bank Examination Workshop February 2026

Validation Response Issues • Challenges to validation findings tend to be asymmetric  Management less likely to challenge an outcome that results in an advantage for them  Firms may incorrectly believe that model risk is low simply because outcomes from model-based decisions appear favorable to the institution • Nature and motivation behind model users’ input should be evaluated carefully, and firms should also solicit constructive suggestions and criticism from sources independent of the line of business using the model.

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Review Follow-up • Preparation for future examinations or external audits • Identify previous issues or findings • Verify status  Still outstanding  Resolved or not (who owns responsibility?) • Anticipate potential issues that examiners or external auditors might identify

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