Model Validation Basel

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Information to assess the validity of reporting at both Group level and for individual credit models should be implemented.

Actual Losses shouldbe captured and used together with external data (economic cycle indicators, competitor analysis and Obligor default rates) to provide an assessment of the overall validity of risk models and process.

This information is reported to enable the market to assess the validity of credit risk systems.

Further, it is expected that this information will be analysed internally to determine any potential adjustments or ‘calibration’ that is required to the underlying credit risk models to ensure the validity of future risk-based reporting.

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