easy · FRM Part 2 Operational Risk
A model validation team is calculating the Population Stability Index (PSI) to detect input drift.
If the PSI for a key scoring feature is calculated as 0.18, what is the standard institutional interpretation of this result?
- The population is stable and no action is required.
- A major shift has occurred, requiring immediate model redevelopment.
- The model is suffering from a Type I backtesting error.
- A moderate shift has occurred, warranting further investigation.
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