Standalone NPV models should be included in the scope of models managed by institutions. These models should be included in the model inventory and subject to the life-cycle management articulated in the MMS. The management of these models should be governed by the Model Oversight Committee.
7.2.2
These models are deterministic in substance as they do not need statistical calibrations. Therefore the recalibration step of the life-cycle does not apply to them. However, the suitability of inputs and the assumptions embedded in the model construction should be reviewed on a regular basis, or whenever there is a significant change in assumptions.
7.2.3
Institutions should establish a general consistent methodology for standalone NPV computation that follows the entire model life-cycle management, including the validation step. Independent model validation should follow the principles articulated in the MMS.
7.2.4
In addition to the regular generic validation of the approach and usage, institutions should define materiality thresholds, beyond which the valuation of specific transactions should be subject to modelling review by an independent model validator. The threshold of materiality should be clearly documented.
7.2.5
For NPV computation in the context of facility rescheduling (restructuring), the choice of methodology, inputs and assumptions should follow accounting principles.