Vendor Model Validation: Challenges And Proposed Solutions

Validation of vendor models has always been regarded as a complex task to accomplish due to firms’ inability to access proprietary code and underlying data. Vendor models have also attracted increased attention from regulators in the recent times, providing further motivation for banks and financial services institutions to make progress in this area.

Despite the apparent challenges, a great deal of model risks can be recognized and mitigated by thoughtful and well-planned validation