Independent Validation must rate Model M's proposed paper-trading trial Green, Amber or Red using the three review components already defined in model risk management: process, performance and usage. This note makes that rating decision and writes a short memo with one remedial and one recommended action — without repeating the full lifecycle lecture or inventing regulatory detail beyond that note.
Learning objectives. By the end of this note you should be able to:
- score M on process / performance / usage with programme evidence;
- choose Green, Amber or Red for a bounded paper trial;
- distinguish remedial from recommended actions;
- enforce that the developer is not the independent reviewer.
In this lesson
- The decision: Green, Amber or Red?
- Artifact: validation memo
- Limitation: independence is part of the rating
- Scoring the three components explicitly
- Independence as a hard gate
- Worked rating changes
- Desk checkpoint: memo minimum fields
- Pitfall: informal paper trading
- Decision card: rate the trial ask
Before you start
The full lesson, with worked examples and exercise solutions, is for members.
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