Model Validation
Third party model validation is an important tool to ensure that the data you and your board rely on remains accurate. In the rapidly changing world of financial services, a review allows you to know that your model is not only calculating properly but that the processes you use, from data entry to report generation, are kept up to date and constantly improved.
Southeast Corporate’s NEV and NII Model Validation service is designed for credit unions that are already performing interest rate risk modeling in-house. Since you most likely rely on your model to make management decisions, the quality and accuracy of your results are of paramount importance. With Southeast Corporate the degree of service can be customized to suit your needs. For example, if you believe that a simple review of your assumptions is needed we can scale back the full review.
Full Model Validation Service Overview
- An on-site review of systems, procedures, valuation assumptions, documentations, and organizational configuration relating to assets liability management
- An evaluation of the output of the ALM system
- A written evaluation of the reasonableness and appropriateness of these elements within the context of the intended audiences of the output
How the Model Validation Service Works
- Data sources and data management process are assessed for reliability and validity
- Valuation assumptions used to derive market values are evaluated for appropriateness and reasonableness
- Output of the ALM model is evaluated
- The risk control environment is assessed
- Suitability of the ALM reports generated by the system are reviewed
- Key personnel responsible for developing the modeling assumptions and interpreting the results are assessed
