Deep Technology sp. z o.o. | Nowy Świat 33/13 | 00-029 Warsaw | Poland

Model audit

Model audit is designed to answer the following questions: what is the purpose and process of the model? Has this goal been met? During the audit, we analyze its business functionality and whether we really achieve what it was designed for using the model.

Commercial banks obtain from 35 to 60% of assets thanks to various types of loans. It is a service that brings banks the highest income with the greatest risk. That is why banks in the United States have been using scoring models since the 1930s.
This method did not reach Poland until the 1990s. However, in order for scoring models to bring profits to organizations by minimizing losses, they should be constructed professionally and without errors.

We offer an audit of the scoring model and rating model

Analysis of the structure of the existing model

At the first stage, we analyze the construction of the model. Was the model created as classification trees, neural networks, or was it used to build logistic regression or mathematical programming? We check the correctness of the method used by means of statistical and other tests.

Model validation

Then we check in detail what its statistical reliability, quality and data consistency are. We verify various elements: for example, whether the data that has been included in the model are statistically significant, what is the predictive power of the model and the stability of the variables.

Model monitoring assessment

When verifying model monitoring, we look at the causes as well as the elements that are included in the monitoring reports. We analyze whether the monitoring is running correctly and whether it will detect errors if necessary.

Evaluation of IT systems that maintain the model

One of the most important audit steps is to check the systems that maintain the model. In what situations is the model likely to be defective? Are the systems properly maintained to prevent scoring and rating model errors? After our audit, you won’t worry about it.

Usage tests

Usage tests are a practical part of the model audit, designed to assess whether a given model meets the developers’ expectations, whether it is accurate and whether reliable results can be obtained with each use.

Recommendations after the audit of the scoring or rating model

The last stage is the preparation of our recommendations. We indicate areas that require modification along with professional justification.

Professional use of scoring models is quite expensive due to the need to implement a specific IT system with them. Nevertheless, these models are becoming the norm and are a must to manage credit risk effectively. Order an audit and you will be sure of the correctness of your model.