Model Quality Overview
Model Development Controls, Testing, and Validation
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Kovrr’s Model Quality Overview FAQs
Speak to an Expert to Learn MoreWhat are the main components used to maintain CRQ model quality?
Kovrr maintains the quality of its CRQ model by structuring risk controls around the three main components, or pillars, of "model risk."' The first of these pillars is the inputs and data fed to the models, where controls and checks are performed to ensure the model is calibrated on the correct data, used and interpreted appropriately. The second pillar is model calculations, which cover how the core mathematics of the simulation are implemented without error. Finally, the third pillar is the quantification outputs, which check that the overall simulation generates results that represent realistic scenarios.
What are the controls and validation tests for the input and data pillar?
For the inputs and data pillar, Kovrr has undertaken a combination of data validation expert reviews and comparisons against independent sources to ensure that parameters are accurate and well supported. We also establish change controls and audit management, keeping track of everything that has changed, including when and why. Similarly, when parameters are changed, we follow up with even more validation testing to prove the reasonableness of these updates.
What are the controls and validation tests for the model calculations pillar?
The model calculations concern the mathematics of the model and how it operates mechanically. When making changes, improvements, or adding new features to the model, we outline and review model-change specifications and implement change control management. Kovrr employs many modern coding standards to ensure the software acts appropriately and can be deployed quickly and without error. This includes the use of unit and integrity testing, as well as regression tests against prior results, so any changes to the model are well understood.
What are the controls and validation tests for the outputs and results pillar?
The outputs and results pillar confirms the correct operation of the model as a whole. We employ both a top-down and bottom-up validation approach for the CRQ assessment's output and results. Our experts review the results in direct comparison to historical events, industry reports, and client case studies, allowing us to prove that model outputs are accurate. We're also receiving continuous feedback from our clients who similarly remark upon the accuracy and preciseness of quantifications, allowing them to plan targeted cyber risk mitigation strategies.