Explanation:
BHCs should maintain an inventory of all models used in the capital planning process, including all input or “feeder” models that produce projections or estimates used by the models that generate the final loss, revenue or expense projections.
Things to Remember
Feeder models are a crucial part of the capital planning process in Bank Holding Companies (BHCs). They are used to generate projections or estimates that are then used in another model to generate the final figures for expected losses, expenses, and revenue.
The use of feeder models allows for a more detailed and comprehensive analysis as it breaks down the overall modeling process into smaller, more manageable parts. This increases the accuracy and reliability of the overall projections.
Feeder models are not used for performance comparison with external models, nor are they defined by the level of agreement or disagreement regarding their outcomes. They are also not used to generate the final projected figures for losses, expenses, and revenues directly.
Ultimate access to all questions.
Q.2237 What do you understand by “feeder models” as used in modeling by BHCs?
A
Models outsourced from external sources for the purpose of performance comparison with internal models.
B
Models used to produce projections or estimates that can then be used in another model to generate final figures for expected losses, expenses and revenue.
C
Models whose outcome has been disputed by experts and analysts at firm level.
D
Models used to generate the final projected figures for losses, expenses, and revenues.
No comments yet.