Economics · Model Risk Management
Within the framework of model risk management in financial institutions, which of the following is a primary characteristic of 'model validation' that distinguishes it from 'model development'?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is the process of generating final pricing reports for external regulatory compliance.
- 2It involves the selection of the specific programming language for model implementation.
- 3It is an independent review process that challenges the model's logic, assumptions, and limitations.✓
- 4It focuses solely on the calibration of model parameters using the same dataset used by developers.
Correct answer
It is an independent review process that challenges the model's logic, assumptions, and limitations.
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