How it works

The full ECL model as an interactive flowchart. Click any step for the detail. Bind a run to overlay real numbers.

Machine 1 — Calibration (slow, per quarter)

Compiles default history + economics into a frozen, approved model.

Machine 2 — ECL Run (fast, per reporting date)

Executes the frozen model over today's loan book — pure arithmetic.

Governance & lineage

Approvals, audit, back-test, and bit-identical reproduction.

ODR history

In plain English

For each loan segment the bank supplies ~23 quarters of history: how many accounts existed and how many went bad (NPA). The ratio each quarter is the Observed Default Rate (ODR) — the raw material PD is built from.

Formula

ODR = NPA accounts ÷ total accounts   (per quarter)

Worked example

e.g. 30 NPA / 1,000 accounts = 0.030 (3.0%)

Glossary

ODR: Observed Default Rate — historical % that defaulted per quarter.
NPA: Non-Performing Asset — a loan that has gone bad.