Operations, Asset Servicing & Risk · related to Market Risk Analyst

Model Validation Analyst

Full profileYour role

L3 salary: Not published yetSalary figures open with the salaries section.
Upcoming dated changes: 10 changes aheadNext: 1 Jan 2027
Where the changes come from
Each change in the Regulatory calendar comes from an official text, linked on its page.
A change affects this role directly when it names a process that is one of the role's main tasks.
Top critical skills: Risk measures and sensitivities
Derivatives and how they work
Basel framework and capital

What the role does

A model validation analyst independently reviews the quantitative models a bank or investment firm uses for pricing, risk measurement and regulatory capital. The role checks that a model is conceptually sound, correctly implemented and fit for its use, using replication, benchmarking, sensitivity tests and backtesting. It writes validation reports with findings and conditions, tracks remediation and supports model risk governance in the second line of defence, following supervisory expectations such as the ECB guide to internal models.

Read a day in the life

A day in the life

The analyst is halfway through validating a new interest rate option pricing model. The morning starts with reading the developer documentation and listing the assumptions: the volatility model, the calibration instruments and the numerical method. Next comes an independent implementation in Python to replicate prices for a sample of trades. Most prices match within tolerance, but long maturity trades differ, so the analyst tests the calibration under stressed market data and finds the model becomes unstable. Late morning brings a call with the developers to discuss the result and agree whether it is a limitation or a defect. After lunch the work turns to an annual review of a VaR (Value at Risk) model: checking backtesting exceptions, data quality and whether past findings were closed. The afternoon ends with drafting findings in the validation report, rating each one by severity, and updating the model inventory so that model risk committees see the current status.

Levels

L1 Starting out 0-2 years
L2 Independent 2-5 years
L3 Senior or specialist 5-9 years
L4 Leads a team or an area 8-14 years
L5 Leads the function 12+ years

Full level descriptions and job titles

The EFO level names are the common scale; job titles differ between employers.

Levels of Model Validation Analyst
Level	What the work looks like	Typical years	Typical job titles
L1 Starting out	Runs replication and testing tasks set by senior validators, checks data and documentation, writes parts of validation reports and learns pricing, risk and capital models under supervision.	0-2	Banks: Analyst, Junior Analyst, Associate (asset servicing), Trainee, GraduateAsset servicers: Junior, Specialist (entry), Officer
L2 Independent	Validates models of moderate complexity end to end, writes full reports with rated findings, challenges developers directly and trains L1 analysts on testing tools and standards.	2-5	Banks: Analyst / Senior Analyst, AssociateAsset servicers: Specialist, Senior Specialist, Senior Officer
L3 Senior or specialist	Validates complex pricing, risk and capital models, handles disputed findings and model changes, and represents validation in supervisory inspections, audits and model risk projects.	5-9	Banks: Senior Associate, AVP, Assistant ManagerAsset servicers: Senior Specialist, Expert, Team Lead (small team)
L4 Leads a team or an area	Leads a validation team for a model family, plans the validation programme, owns quality of reports and finding tracking, and is the escalation point for developers and model owners.	8-14	Banks: VP, Manager, Senior ManagerAsset servicers: Team Lead, Manager, Head of Section
L5 Leads the function	Head of model validation or model risk for a legal entity or region, sets validation standards and the model risk framework, and reports to the risk committee, the board and supervisors.	12+	Banks: Director, Executive Director, Managing Director, Head of functionAsset servicers: Head of Department, Director

Skills

The percentage is the skill's share of the role; the bars are drawn relative to the anchor skill, which is shown full.

Critical 6

The job cannot be done without these.

Risk measures and sensitivitiesWeight 12.8%Anchor skillExpected level: practitionerRelevant to you
Derivatives and how they workWeight 8.5%Expected level: practitionerRelevant to you
Basel framework and capitalWeight 8.5%Expected level: practitionerRelevant to you
Descriptive statistics and distributionsWeight 8.5%Expected level: practitionerRelevant to you
Financial markets knowledgeWeight 8.5%Expected level: practitionerRelevant to you
Model validation and governanceWeight 8.5%Expected level: practitionerRelevant to you

Important and supporting skills 16

Important 7

Needed in most positions.

Python for data analysisWeight 4.3%Expected level: practitionerRelevant to you
Advanced Microsoft ExcelWeight 4.3%Expected level: practitionerRelevant to you
Querying data with SQLWeight 4.3%Expected level: practitionerRelevant to you
Risk judgment and escalation instinctWeight 4.3%Expected level: practitionerRelevant to you
Professional written communicationWeight 4.3%Expected level: practitionerRelevant to you
Independent price verificationWeight 4.3%Expected level: practitionerRelevant to you
Attention to detailWeight 4.3%Expected level: practitionerRelevant to you

Supporting 6

Help in many positions.

Trading and risk systems (Murex, Calypso)Weight 2.1%Expected level: working knowledgeRelevant to you
P&L production and explanationWeight 2.1%Expected level: working knowledgeRelevant to you
Prudential and regulatory reporting (COREP, FINREP, US call reports)Weight 2.1%Expected level: working knowledgeRelevant to you
Working to tight deadlinesWeight 2.1%Expected level: working knowledgeRelevant to you
Applied statistical modelling for pricing and risk (GLM, survival)Weight 2.1%Expected level: working knowledgeRelevant to you
Control mindset (what could go wrong)Weight 2.1%Expected level: working knowledgeRelevant to you

Useful 3

Occasionally useful.

Visualisation tools (Power BI, Tableau)Weight 0.7%Expected level: working knowledgeRelevant to you
Stakeholder managementWeight 0.7%Expected level: working knowledgeRelevant to you
Operational resilience and ICT risk rules (DORA and equivalents)Weight 0.7%Expected level: working knowledgeRelevant to you

Processes

The work the role takes part in.

What each process covers

Capital calculationMainComputing how much capital the bank must hold against its risks.
Market risk measurementMainMeasuring sensitivities and potential losses on trading positions.
Model development and validationMainBuilding and independently checking risk and pricing models.
P&L and valuation controlMainProducing and explaining daily P&L and independently checking prices.

Where the role concentrates

How AI is changing the role

Code replication, standard test batteries, documentation checks and first drafts of validation reports are increasingly automated.

Read the full assessment

Code replication, standard test batteries, documentation checks and first drafts of validation reports are increasingly automated. At the same time the scope of validation grows: machine learning models for credit, fraud and anti-money laundering need review for bias, stability and explainability, and the EU AI Act and EBA work on AI in banking raise expectations on model governance. Value moves to judgement on model limitations, challenge of developers and clear writing for committees. The World Economic Forum Future of Jobs Report 2025 ranks AI and big data and analytical thinking among the fastest-growing skills.