Chapter 0 Actuarial Control Cycle

Question 1

List 7 applications of the ACC

Answer 1

1. ) Analyse the problem to identify the risk surrounding the problem
2. ) Quantify the financial consequence should the risks identified occur
3. ) Consider and quantify appropriate methods to manage, mitigate and transfer these identified risks.
4. ) Monitor the situation and the risk management procedures implemented in the development
5. ) If the experience is different than expected, modify or change to be a closer fit to the actual experience
6. ) Consider the appropriate economic and commercial environment
7. ) Apply professionalism at all stages.

Question 2

What makes the ACC actuarial (11)

Answer 2

1. ) Estimate the financial impact of uncertain future events
2. ) Long-term rather short-term horizon
3. ) Recognise of stakeholders and their risk profiles
4. ) Make short-term decisions in the light of expected future outcomes
5. ) Use models to represent future uncertain outcomes
6. ) Use assumptions based on historical experiences
7. ) Allow economic environment - legislation, taxation, and competition
8. ) Interpret modeling results in order to arrive at practical strategies
9. ) Monitor and periodically analyse the emerging experience
10. ) Modify models and assumptions given the emerging experience
11. ) Apply professional judgment

Question 3

List the 3 stages and 2 inputs to the ACC

Answer 3

Stages:

• Specify the problem
• Develope the solution
• Monitor the experience

Input:

• Professionalism
• General and commercial economic environment

Question 4

List what to consider under specify the problem (4)

Answer 4

• Set the objectives
• Identify and analyse risks
• Consider how to manage, mitigate and transfer these risks
• Consider stakeholders

Question 5

List what to consider under develope the solution (9)

Answer 5

• Consider existing models for the problem
• Select the appropriate model or build a new one
• Consider and select assumptions
• Interpret the results of the model
• Consider implications of model results on problem
• Consider implications of model results for all stakeholders
• Determine the solution to the problem
• Consider alternative solutions
• Formalise the solution

Question 6

List what to consider under monitor the experience (4)

Answer 6

• Monitor regularly to reflect on current experience
• Identify variance and reasons for it
• Identify trends
• Feedback into other stages of the control cycle

Question 7

List what to consider under general and commercial economic environment (7)

Answer 7

• Understand the environment in which the product is being sold
• Consider the impact decisions will have on the environment
• Include:
• Economic outlook
• Customer needs and trends
• Marketing and competition
• Regulation
• Taxation

Question 8

List what to consider under professionalism (8)

Answer 8

• Professional conduct standards
• Technical and ethical standards
• Views of all stakeholders
• Act with integrity and detachment from the problem
• Personal situation
• Build a relationship with the client
• Avoid conflicts of interest
• Communicaiton