Process/Model validation designed and executed by parties that are separate (independent) from those that parties that build, sell, resell or are using or running the system being validated. The validating parties may be internal to the organization (e.g. credit risk managers) or independent third-parties (e.g. consultants). Validation should include conceptual soundness as well as back-testing against out-of-sample benchmarks. It should be done by staff with appropriate qualifications and incentives.
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