services > model validation > who > what > when > where > why > how >

on model validation

questions & answers

who?

a qualified independent third party
– qualified = specialized technical expertise required
– independent third party = not your ALM model software vendor
...more

what?

assess the predictive ability of an institution’s risk estimates
...more

where?

a combination of on- and off-site represent “best practices”
...more

why?

required by financial regulators & sound corporate governance
improve model reliability
- more reliable model = better decisions = better profits
enhance corporate governance
- more ALCO/Board confidence in model results & model team
opportunity for consultant “better practice” recommendations
...more

how?

include both quantitative and qualitative elements – assessment, benchmarking, and comparative procedures
...more

real world solutions >

real time ALCO reporting? Over the past few years, there have been days with historically high interest rate volatility. After several such days, the management of Sample Bank believed their annual budget was no longer accurate.

Working with the ALMnetwork, Sample Bank produced forecasts based on rates “as of” the prior days’ close. While not exactly “real-time” reporting, next day reporting was useful to the management of Sample Bank in comprehending their new earnings position, formulating new tactics and strategies, and fine-tuning their pricing.