A.1. ASOP 12

Question 1

Considerations for which risk characteristics to use

Answer 1

• Relationship of risk characteristics & expected outcomes
• Causality
• Objectivity
• Practicality
• Applicable Law
• Industry practices
• Business practices

Question 2

Considerations in establishing risk classes

Answer 2

• Intended use
• Actuarial considerations: Credibility, homogeneity and practicality
• Other considerations: Law, industry, and business practices.
• Reasonableness of results