8.The multiplication factor shall be increased by a plus‐factor of between 0 and 1 in accordance with Table 1, depending on the number of overshootings for the most recent 250 business days as evidenced by the institution's back‐testing. Competent authorities shall require the institutions to calculate overshootings consistently on the basis of back‐testing either on actual or on hypothetical changes in the portfolio's value. An overshooting is a one‐day change in the portfolio's value that exceeds the related one‐day value‐at‐risk measure generated by the institution's model. For the purpose of determining the plus‐factor the number of overshootings shall be assessed at least quarterly.U.K.
The competent authorities may, in individual cases and owing to an exceptional situation, waive the requirement to increase the multiplication factor by the ‘plus‐factor’ in accordance with Table 1, if the institution has demonstrated to the satisfaction of the competent authorities that such an increase is unjustified and that the model is basically sound.
If numerous overshootings indicate that the model is not sufficiently accurate, the competent authorities shall revoke the model's recognition or impose appropriate measures to ensure that the model is improved promptly.
In order to allow competent authorities to monitor the appropriateness of the plus‐factor on an ongoing basis, institutions shall notify promptly, and in any case no later than within five working days, the competent authorities of overshootings that result form their back‐testing programme and that would according to the above table imply an increase of a plus‐factor.