Abstract
This Financial Insights report details why a validation is essential, the
appropriate steps to carry out a validation analysis, and who the business
constituents are that rely on validations and also details what we mean by
model "performance."
"As the global economy struggles in recession, lenders across industry
verticals should closely track and validate their scoring models. During
economic times of rapid expansion and contraction, scoring models can degrade
in their ability to make optimal loan recommendations. Sound population and
scorecard tracking and validation practices are part of a robust enterprise
risk management program." - Dana Wiklund, research director, Global Risk
Management
Table of Contents
- Table of Contents
- Financial Insights Opinion
- In This Report
- Situation Overview
- Variability Within a Population
- Consumer Behavior
- Who Uses Validations?
- Who Should Perform Validation Analytics?
- How Validations Fit Within an Enterprise Risk Management Context
- Method Specifics
- Tracking Through-the-Door Populations
- Final Score Report
- Figure: Final Score Report
- Population Stability
- Figure: Population Stability
- Characteristic Analysis
- Figure: Characteristic Level Changes
- Interval Bad Rates
- Figure: Interval Bad Rate Analysis
- Validation Sample
- Components of a Score Validation
- Statistical Measures Used in Score Validations
- Kolmogorov-Smirnov Statistic
- Figure: Kolmogorov-Smirnov Statistic
- Divergence
- Figure: Divergence
- Predictiveness Index
- Figure: Predictiveness Index
- Information Value
- Figure: Information Value
- Future Outlook
- Essential Guidance
- Learn More
- Related Research
- Synopsis
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