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Validation TechniquesIndependent validation

Independent model validation

A review performed with sufficient separation from model development, ownership, and use to provide credible challenge. Independence includes reporting lines, authority, competence, incentives, access to evidence, and freedom from conflicting work.

Last updated: Last reviewed by: Model Risk Directory editorial team

How the term is used in model risk management

A review performed with sufficient separation from model development, ownership, and use to provide credible challenge. Independence includes reporting lines, authority, competence, incentives, access to evidence, and freedom from conflicting work. The exact implementation varies by institution, model type, risk rating, and governing framework. Use the linked regulatory pages and buyer guides below for scope-specific requirements.

Related glossary terms

Model validationValidation independenceEffective challenge

Guides and frameworks that use this term

GuideModel Risk ValidationModel risk validation is the independent testing of a specific model's conceptual soundness, ongoing performance, and outcomes, performed by staff or a third-party firm genuinely separate from that model's development. It is the 'effective challenge' function required under SR 26-2 and SR 11-7, distinct from broader model risk management program design.GuideTop model risk management firmsThe right model risk management firm depends on the models in scope, governing framework, independence requirements, technical methods, jurisdiction, and delivery capacity. This guide groups the directory's advisory firms alphabetically and provides a verification checklist. It does not assign rankings, scores, or endorsements without comparable evidence.GuideModel Risk ManagementModel risk management (MRM) is the discipline of identifying, measuring, and controlling the risk that a bank's quantitative models produce incorrect or misused results. An MRM advisory firm helps build or run that discipline: model inventory, tiering, governance, and independent validation, rooted in Federal Reserve SR 26-2 (formerly SR 11-7) and OCC guidance.GuideModel Risk Management FrameworkA model risk management framework is the documented set of policies, roles, and processes an institution uses to identify, tier, govern, and validate its models. Under SR 26-2, a sound framework covers model development and use, independent validation, and governance and controls, scaled to the institution's size and model risk profile rather than applied uniformly.GuideSR 11-7 ComplianceSR 11-7 was formally rescinded on April 17, 2026 and replaced by the interagency guidance SR 26-2. Institutions still describing their program as 'SR 11-7 compliant' should update to reference SR 26-2, which preserves SR 11-7's core disciplines, effective challenge, independent validation, governance, while shifting to a risk-based, tailored supervisory approach.FrameworkSR 26-2SR 26-2, issued jointly by the Federal Reserve, OCC, and FDIC on April 17, 2026, is the current US interagency guidance on model risk management. It supersedes SR 11-7 (2011) and SR 21-8 (2021), preserving core disciplines like effective challenge and independent validation while shifting to a risk-based approach tailored to an institution's model risk profile, size, and complexity.