Management of insurance businesses: planning and control

Question 1

SMART objectives

Answer 1

Specific
Measurable
Achievable
Relevant
Time-defined

Question 2

Forecasting

Answer 2

Method by which budgets are put together by directors and senior managers

Question 3

Top-down budgeting

Answer 3

Directors decide on the individual plans for each department and function

Question 4

Bottom up budgeting

Answer 4

Department managers construct their own budgets which are passed up

Question 5

Zero based budgeting

Answer 5

Justifying expenditure from a fresh standpoint (evidence need for every spend)

Question 6

Rolling budgets

Answer 6

Adding 1 additional month of runway, 12 months out, every month

Question 7

Unfavourable variance

Answer 7

Budgets not met

Question 8

Favourable variance

Answer 8

Budgets are exceeded

Question 9

Causes of variance

Answer 9

Inadequate pricing
Higher expenses
Random events
Operating efficiency

Question 10

5 Cs of decision making

Answer 10

Consider, consult, crunch, communicate, check

Question 11

What is a balanced scorecard?

Answer 11

A tool to track performance across finance, customers, processes, and learning.

Question 12

What is benchmarking?

Answer 12

Comparing performance with industry best or competitors.

Question 13

What is management by objectives (MBO)?

Answer 13

Aligning individual goals with company strategy.

Question 14

What does forecasting cover?

Answer 14

Levels and types of business that will be transacted
Turnover
Income (including investment)
Planning for capital resources

Question 15

Fixed budget

Answer 15

Not changed once established

Question 16

Flexible budget

Answer 16

Changed in accordance with organisations real activity levels

Question 17

Levels of information within an organisation

Answer 17

Strategic - what it does and why

Tactical - how it will achieve it (time, money, people)

Operational - day-to-day

Question 18

Management information systems

Answer 18

Collects data from many sources and then processes and organises the data to help businesses make decisions

Question 19

Knowledge management

Answer 19

Compilation and redistribution of an organisation’s collective skills and experience for the benefit of the organisation as a whole

Question 20

Management by exception

Answer 20

Minimises variance investigations by assigning a threshold

Question 21

Control cycle

Answer 21

Comparison of actual results against a plan and production of exceptional reports to show where control action may be needed

Question 22

Strategic information

Answer 22

What and Why

planning future objectives and predicting outcomes

Patterns and trends in financial services and economy

Question 23

Tactical information

Answer 23

How it plans to achieve that

Planning resources - time, money, people

Question 24

Operational information

Answer 24

Day to day operations

Used by front-line managers

Question 25

Key risk indicators

Answer 25

Regular review of key risks to the business (IT downtime, fraud etc)

Question 26

Codification strategy

Answer 26

Knowledge management tactic Knowledge is codified and stored in databases to be accessed

Question 27

Personalisation strategy

Answer 27

Knowledge is tied to the person who developed it and shared through person-to-person contact