Chapter 0 - ACC Flashcards
What are the five main “boxes” in the ACC diagram (p.3 of notes)?
General Economic Environment Identifying the problem Developing the solution Monitoring the experience Professionalism
Give examples of things to consider in the general economic environment when applying the ACC.
Terminology Asset characteristics The market in which fund exists Possible level and variability of returns of assets Correlation of returns on asset classes Legislation and regulation Tax Competition and applicable performance benchmarks Impact of professional guidance
Discuss the general steps when specifying the problem (Key word is risk)
Identify and analyse the risks of various stakeholders.
Define the problem from viewpoint of key stakeholders.
Determine strategic course of action which could be used to manage these risks.
- This could involve risk management, mitigation or transferral.
List some general actions taken when developing the solution? (Key word is model)
Examine existing models and how they can be adjusted.
Selection of most appropriate (adjusted) model, or construction of a new model.
Selection of assumptions and assumption values
Interpretation of results
Consider implication of results and assumptions on overall problem
Consideration of implication of results for stakeholders
Determine proposed solution to the problem
Consideration of alternative solutions, weighing up the pros and cons.
Formalising a proposal
Communicating the proposed solutions.
List general actions taken when monitoring the solution?
Compare actual experience with what was assumed.
Identify the reasons for departure from expected experience.
Regular feedback into the problem and solution stages to improve solution
What is risk? When does this occur?
Exposure to actual events being different to (or worse) than what was expected for the applicable stakeholder.
Risk mainly occurs when the timing and amount of assets/liabilities are worse than expected relative to each other. (eg poor matching)
Name the main ways to mitigate risk. (STAAR)
Share Transfer Avoid Accept Reducing (minimising)
