backtesting definition
backtesting. - means the process of comparing the losses projected by the model (technique employed by the bank) with those actually occurred during the testing period. It serves as a crucial tool to validate the stress testing model (the employed technique), which is a process to validate if the model (the employed technique) is appropriate. The main goal of backtesting is to assure, at a certain confidence level, that the actual losses do not exceed the expected losses.