The correct answer is D. Establishing a continuous process of model risk management and validation is the appropriate recommendation for the Chief Risk Officer (CRO) to make. This approach is favored because it allows the bank to respond more quickly to dynamic market conditions and enables more frequent recalibrations of the models. A continuous process is more resource-intensive than periodic validation and review but is crucial for maintaining the effectiveness and accuracy of the bank's risk management framework.

Option A is incorrect because internal audit staff should not be involved in both the validation activities and the assessment of the overall model risk management framework. This could lead to a conflict of interest and compromise the objectivity and independence of the audit process.

Option B is incorrect as ongoing monitoring should begin when the model is first implemented in production systems, not after the backtest has been successfully completed. Backtesting results are not immediately available and waiting for them before starting monitoring could delay the detection of issues with the model.

Option C is incorrect because third-party vendor models may need to be customized to fit the specific operating circumstances of the bank. It is essential for banks to verify the relevance of any inputs or assumptions provided by the vendor and to document any customizations made to the models. Simply implementing vendor models under the initial assumptions provided may not be suitable for the bank's needs.