Chapter 0: What is A311 all about

Question 1

Risk management

Answer 1

The process of analysing, quantifying, mitigating and monitoring risks

Question 2

Processes involved in risk management

Answer 2

Specify the problem
* Determine risks that products are exposed to
* Quantify financial consequences

Develop the solution
* Consider and quantifying appropriate methods of managing, mitigating and transferring the risks

Monitor the solution
* Monitor the situation and the risk management procedures implemented as time develops
* Modify and change the risk management aproaches adopted in light of new experience

Question 3

What makes thr ACC a “control”

Answer 3

The feedback mechanism

Question 4

What makes the ACC “Actuarial”

Answer 4

• Model building
• Actuarial views

Question 5

Explain the following components of what makes the ACC actuarial
Model building
Actuarial views

Answer 5

• Use of assumptions based on historical experience
• Use models to represent future financial outcomes
• Intepretations of results of the model fornpractical usage
• Monitoring and analysing the experience
• Modifying models in light of this analysis

Question 6

Explain the following components of what makes thev ACC actuarial
Model building
Actuarial views

Answer 6

• A long term rather than short term horizon
• Decisions should be made in the short term in light of future outcomes
• Estimation of the financial impact of uncertain future events
• Recognistion of stakeholders’risk profiles and requirements
• The need to allow for the general economic enviroment
• Application of professional judgement

Question 7

What are the steps in the Actuarial Control Cycle

Answer 7

• Analyse the problem
• Develop the solution
• Monitor the experience
• Professionalism
• The general commercial and economic environment

Question 8

Explain the following step in the ACC:
* Analyse the problem
* Develop the solution
* Monitor the experience
* Professionalism
* The general commercial and economic environment

Answer 8

Aware of the environment in which a problem exists and the impact of any decisions in said enviroment

Question 9

What are things to look for when considering the general commercial and economic environment in the ACC

Answer 9

• Terminology
• Characteristics of products
• How profit is made
• Legislature and regulation
• Tax + investor behaviour
• Competitiors and performance benchmark
• Professional benchmark
• Reinsurance
• Effect on economy

Question 10

Explain the following step in the ACC:
* Specify the problem
* Develop the solution
* Monitor the experience
* Professionalism
* The general commercial and economic environment

Answer 10

• Identify and analyse the risk to the various stakeholders, set out the problem in each stakeholder’s POV
• Provides an analysis for the transfer risk from one stakeholder to another

Question 11

Explain the following step in the ACC:
* Analyse the problem
* Develop the solution
* Monitor the experience
* Professionalism
* The general commercial and economic environment

Answer 11

Models
* Those currently in use and how they may be adjusted to suit the current problem
* Selection or builing
* Consideration of model assumption (helps with sensitivity)

Results
* Interpretation
* Implication on problem
* Implication of results on all stakeholders

Solution
* Determination of proposed solution
* Alternate solutions abd their impact on all stakeholders

Presentation
* Formalising a proposal
* Communicating

Question 12

Explain the following step in the ACC:
* Analyse the problem
* Develop the solution
* Monitor the experience
* Professionalism
* The general commercial and economic environment

Answer 12

• Models should reflect the current experience where relevant
• Should compare actual and expected experience
• Identify departure from expected experience, its impact and how likely it is to occur again
• Usually at the start of a new contract