Risk Solutions Ratings System Validation Services focuses on assessing the risk estimations of probability of default (PD), loss given default (LGD), and exposure at default (EAD), as well as reviewing the ratings in the credit processes. Our solutions include validation diagnosis, framework and process design, and review of the internal validation procedures used either by your institution or a third party.
Our Ratings System Validation Services help you evaluate the effectiveness of your rating methodologies, systems, and processes as compared with Standard & Poor’s methodology, systems, and processes, and it enables us to make recommendations for improvement as needed.
The benefits to your organization:
An independent third-party review of the effectiveness of the credit process
Identify inconsistencies in your organization's internal processes; and
Ensure compliance with Basel requirements.
Our solutions offer:
Review of conceptual soundness and initial risk quantification of your institution's internal rating system (IRS) design including concept, methodology, assumptions, and gap analysis;
Review of risk rating operations replicability, override, and exceptions monitoring, IRS Key Performance Indicators (KPI) monitoring, data integrity, and Use Test performance; and
Performance Testing/Outcomes Analysis, including backtesting and benchmarking; stress-testing, including estimating Long-Run PD, Downturn LGD, and annual health check.
Risk Model Validation
An independent review of the methodologies and overall performance of risk models to meet industry best practices and Basel compliance.
Validation Gap Analysis
A review of your credit assessment methodologies and risk monitoring practices, collateral, and liquidity considerations to identify the critical elements of your institution's methodologies, processes, and procedures.
Quantitative Credit Models
Commercially available quantitative models for estimating ratings, probability of default, and loss given default.
Credit Risk Data
A comprehensive set of robust and consistent credit loss information; data consortia and management tools.
Risk Rating Scale Development
Provides a process for improving credit methodologies and analysis.
Credit Assessment Templates
Provides credit assessment templates that include quantitative and qualitative risk factors, low-default sectors, or specialized asset classes.
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