From Open Risk Manual
Model Specification is a document that states the operational requirements and expectations from the model, produced e.g., when the model sponsor requests the Model Development.
- Fixing model parameters or hyper-parameters
- Specifying the precise Risk Data to be used as Model Inputs
- Fixing the set of risk metrics produces as Model Outputs (choice of measure, confidence level etc.)
Issues and Challenges
- A precise model specification is invaluable for the later stages of the Model Development and validation cycles.
- To the degree that model specifications are hidden in implicit mandates and conventions, model performance and model validation face the additional difficulty of determining what is a reasonable standard for accepting a model.