Financial Risk Manager Part 2
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What is an essential aspect of the development process for credit risk scoring and rating models?
A
The implementation phase focuses on mapping credit scores to risk rating classes based on empirical PD estimates and ensuring a well-diversified distribution of borrowers across rating categories.
B
Model validation primarily involves comparing the credit model's results to those of external assessments, such as ratings issued by credit rating agencies, to identify significant discrepancies.
C
During data collection and pre-processing, expert judgment is considered unnecessary, and all attribute selection is based solely on algorithmic procedures and statistical tests.
D
The development process does not involve continuous evaluation of borrowers; instead, borrowers are rated once, and their ratings remain static over time.