General Studies · Model Risk & Validation
To effectively manage model risk, financial institutions perform backtesting. Backtesting is a key component of model validation that primarily focuses on:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Comparing model outputs with actual realized outcomes to assess the accuracy and predictive power of the model.✓
- 2Comparing the results of a primary model against the results of an alternative, simpler 'challenger' model.
- 3Ensuring that the model's documentation is stored in a centralized repository accessible only to the IT department.
- 4Restricting the use of the model to only those personnel who were involved in its original design and calibration.
Correct answer
Comparing model outputs with actual realized outcomes to assess the accuracy and predictive power of the model.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for General Studies?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Model Risk & Validation MCQs →Want more practice questions on Model Risk & Validation?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in General Studies · Model Risk & Validation