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on model validation: when?

usually annually, but it depends on...

risk complexity, for:

those with complex structured financial instruments, it is an ongoing process with annual external validation
most institutions, annually is appropriate
those with very limited optionality, every two to three years

risk models, for those with:

advanced ALM models, it is an ongoing process with annual external validation
standard ALM models, annually is appropriate
basic ALM models, every two to three years
model “workarounds”, annually is appropriate

size

for large institutions, it is an ongoing process with annual external validation
for mid-size institutions, annually is appropriate
for smaller institutions, every two to three years

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.