ECL Model Validation

Definition

ECL Model Validation denotes the processes used to ensure that the credit risk assessment and measurement models used for the derivation of Expected Credit Loss are able to generate accurate, consistent and unbiased predictive estimates, on an ongoing basis.

Components

The ECL Model Validation process includes

• establishing policies and procedures which set out the Accountability and reporting structure of the model validation process
• internal rules for assessing and approving changes to the models,
• reporting of the outcomes of the model validation

See Also

• IFRS 9 Model Validation

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