ValidationValidation

Validation

1. An ADI must have a robust and documented system in place to validate the accuracy and consistency of its internal model. The ADI must demonstrate to APRA that its internal validation process enables it to assess the performance of its internal model in a meaningful and consistent manner. As part of the validation of its internal model, the ADI must regularly compare actual loss experience against its estimates for those losses to ensure their reasonableness.
2. An ADI must have in place a robust process for validating changes to its internal model (including information that flows into that model). This would include a systematic process for reviewing the appropriateness of modelling assumptions and for making changes to those assumptions.