Model Validations

VBC validations and reports are designed with the end user’s goals and needs in mind, supported with transparent methodologies and work papers, and vetted annually by regulatory agencies.

Our validation services incorporate industry best practices, VBC experience and the objectives of each Institution.  Our validation approach and deliverables are designed to comply with all regulatory guidance such as FFIEC 2010-1A IRR and its associated FAQs, NCUA 12 CFR Part 741 and 12-CU-11, and OCC Bulletin 2011-12/FRB SR Letter 11-7.

The VBC team is comprised of industry experts from risk functions in the banking, credit union and fintech industries, regulatory and external auditing fields and financial model development. We offer invaluable and extensive experience from a practitioner, validator and compliance viewpoint.

If it’s a model, we validate it.  We have experience validating an array of financial and risk related models, such as deposit, loan, credit, auto decision, FTP, profitability and the more common models:

  • ALM/IRR

    Our comprehensive validation examines all aspects of the modeling process including account setups and attributes, data and mapping, assumptions, reporting, and model governance. We also evaluate model results and reports to ensure accuracy and compliance with internal policies. All regulatory components such as conceptual soundness, ongoing monitoring and outcome analysis are addressed. VBC's validation team has experience with all of the leading ALM models, including Fiserv (Sendero), ZMdesk, ZM OnlineALM, Ambit/Bancware, Empyrean, QRM, Profitstar and many others.

  • Liquidity Stress Models

    We provide a comprehensive review of the conceptual capabilities and limitations of the model, as well as a detailed validation of all model specifications, from data and assumption inputs, cash flow generation, and contingency funding sources, to risk parameters and reporting.  We evaluate model forecast accuracy and confirm that all liquidity components are addressed and applied correctly in stressed scenarios. In the context of industry best practices, regulatory compliance, and management expectations, we perform a process and governance review to assess Institution established policies, governance structures and internal controls.

  • CECL/ALLL

    We perform a comprehensive review of methodologies, assumptions, calculations, reporting and governance processes. Our validation experience ranges from simplistic Excel-based models to more complex software models that include loss migration analysis. We place significant emphasis on qualitative adjustment factors and accompanying support analysis and documentation. VBC's validation team has experience with the leading software models, including Abrigo’s Sageworks and MainStreet Technologies (MST) as well as internally built models.

  • CRE Stress Testing and Credit Models

    VBC has experience validating various types of credit models, including CRE stress testing, credit loss models (PD/LGD), loan performance stress models, cash flow models, loan valuation models, early warning models, credit scoring models and auto-decision models. Our validation of these models focuses on methodologies, assumptions, calculations, reporting and governance processes.

  • BSA/AML

    VBC validations are customized to meet each institution’s needs while adhering to and meeting all mandated regulatory guidelines. Our qualified CAMS specialist combines a risk-based approach with validation methodologies that ensures accuracy of data inputs as well as offering strategies to enhance model processing and output efficiency. We have experience in reviewing a wide variety of BSA/AML software solutions such as Abrigo’s BAM and BAM+, CSI’s NuMonitor, FIS’s Prime Compliance Suite, Fiserv’s Financial Crime Risk Management, GlobalVision’s Patriot Officer, Jack Henry’s Yellow Hammer, and Verafin.

  • Vendor Model Certification

    Due to the complex nature of simulation models, it is necessary for end users and subscribers to be provided with reasonable assurance that the underlying code is performing as expected.  As such, VBC, an independent and qualified third party, will perform an offsite certification for the Client.  Upon the completion of this engagement, VBC will deliver to the Client a comprehensive report detailing the testing methodologies and subsequent results for all components of the certification.  VBC will also provide a summary certificate outlining the results and an accuracy statement that the Client may distribute freely to their end users and other relevant parties.