Risk drivers and rating criteria
Article 33
1. When assessing the risk drivers and rating criteria used in the rating system for the purposes of Article 170(1), point (a), (c) and (e), (3), point (a), and (4) of Regulation (EU) No 575/2013, competent authorities shall verify all of the following: (a) the selection process of the relevant risk drivers and rating criteria, including the definition of potential risk drivers, criteria for selection of risk drivers and decisions taken on the relevant risk drivers; (b) the consistency of the selected risk drivers and rating criteria and their contribution to the risk assessment with the expectations of the business users of the rating system; (c) the consistency of the risk drivers and rating criteria selected on the basis of statistical methods with the statistical evidence on risk differentiation associated with each grade or pool. 2. The potential risk drivers and rating criteria to be analysed in accordance with paragraph 1(a) shall include the following, where available for the type of exposures: (a) obligor risk characteristics, including: (i) for exposures to corporates and institutions: financial statements, qualitative information, industry risk, country risk, support from parent entity; (ii) for retail exposures: financial statements or personal income information, qualitative information, behavioural information, socio- demographic information; (b) transaction risk characteristics, including type of product, type of collateral, seniority, loan-to-value ratio; (c) information on delinquency: internal information or information derived from external sources, such as credit bureaus.