CH 0 - 3 Practical applications of the actuarial control cycle

Question 1

Actuaries deal with a wide range of practical problems across various fields. Key issues include:

Answer 1

1. Identifying investment and risk management options
2. Asset-liability management (matching assets to future liabilities)
3. Measuring current profit/solvency and projecting future solvency
4. Assessing capital needs to protect against risk events
5. Calculating provisions/reserves for future liabilities
6. Setting premiums/contributions to meet future benefit promises
7. Determining assumptions (e.g., mortality, expenses, persistency) for pricing and reserving
8. Monitoring investment mismatches and their impact on financial stability

🟦 Example:

In a pension fund, an actuary:

• Estimates the future benefits payable.
• Sets contribution levels to ensure promises can be met.
• Uses mortality and salary growth assumptions.
• Monitors whether the fund’s assets match liabilities over time.