28. In order for institutions to ensure that the data used in risk quantification is representative …

In order for institutions to ensure that the data used in risk quantification is representative of the application portfolio covered by the relevant model in accordance with Sub-section 2 of Section 6 of Chapter 3 in Part Three of Regulation (EU) No 575/201 3 and Article 45(2) of the RTS on IRB assessment methodology, institutions should analyse the comparability of the data used for the purpose of calculating long-run average default rates or long-run average LGDs as referred to in Article 179(1)(d) of Regulation (EU) No 575/2013 and, where relevant, the representativeness of the pool in accordance with Article 179(2)(b) of that Regulation, in terms of all of the following:

• (a) the scope of application;
• (b) the definition of default;
• (c) the distribution of the relevant risk characteristics;
• (d) the current and foreseeable economic or market conditions;
• (e) lending standards and recovery policies.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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