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Q-38. tested over several years, but the CRO considers whether the bank should develop and implement a new model for the commercial loan product. In addition, the CRO wants to ensure that the bank follows best practices for the development, validation, and implementation of any models that it uses. Which of the following actions should the CRO recommend that the bank take?
A
Apply the strongly performing existing model to the new commercial loan product given the model's successful track record.
B
Develop a new model for the commercial loan product and avoid the use of qualitative or judgmental adjustments to the model's quantitative output.
C
Make the model development team responsible for validating all of the bank's models that are currently operational.
D
Perform sensitivity analysis on all models used by the bank to identify market conditions under which they might perform poorly.