Acronyms Flashcards

Question

Identification of causes of risk in projects

Answer 1

PNEFCPB Preston North End Football Club Plays Brilliantly ``` Political risks Natural risks Economic risks Financial risks Crime Project risks Business risks ```

Answer 2

POURS ``` Protect monetary values Opportunities (to take advantage of) Uncertain liabilities Recently received cashflow Short-term liabilities ```

Answer 3

PRICE ``` Payment commencement Request Intervals Combination Entry ```

Answer 4

QUERIED ``` Quantity (credibility) Up-to-date? Errors Relevance (heterogeneity) Incomplete? Exceptionals Detail and format ```

Answer 5

REG CUSHION Regulatory requirement to demonstrate solvency Expenses of launching a new product / starting a new operation Guarantees can be offered Cashflow timing management Unexpected events cushion, eg adverse experience Smooth profit Help demonstrate financial strength Investment freedom to mismatch in pursuit of higher returns Opportunities. eg mergers and acquisitions New business strain financing

Answer 6

SAD LIFE Smooth results Avoid large losses Diversification (investment mismatchment) Limit exposure to risk (single event, accumulations) Increase capacity to accept risk Financial assistance Expertise

Answer 7

SAFARI Suitable approach (eg increase premiums / reduce SA) and special terms Avoid anti-selection Financial underwriting against over-insurance Actual experience in line with expected Risk classification (risks rated fairly) Identify substandard health risks

Answer 8

SAMOSAS ``` Stability / quality of business improved Avoid surprises Management of capital improved Opportunities exploited for profit Synergies identified Arbitrage identified Stakeholders given confidence ```

Answer 9

SCARCER FILES ``` Simple but retains key features Clear results Adequately documented Range of implementation methods Communicable workings and outputs Easy to understand Refineable & developable ``` ``` Frequency of cashflows (balance accuracy vs practicality) Independent verification of outputs Length of run not too long Expense not too high Sensible joint behaviour of variables ```

Answer 10

SCRIBE ``` Strategy for investment Contribution obligations Risks involved Insolvency entitlement Benefit entitlements Expense charges ```

Answer 11

SERVICE Setting sanctions Enforcing regulations Reviewing and influencing government policy Vetting and registering firms and individuals Investigating breaches Checking management and conduct of providers Educating consumers and the public

Answer 12

SHAM FADS Smoothed market value Historic book value Adjusted book value Market value Fair value Arbitrage value Discounted cashflow Stochastic modelling

Answer 13

SIMMERS Sponsor is aware of financial significance of benefits Informed decisions can be made Mis-selling is avoided Manages the expectations of members Encourages take up Regulatory requirement Security of scheme improved as sponsor / trustees are made more accountable

Answer 14

SOUNDER TRACTORS ``` Size of the assets (absolute / relative) Objectives Uncertainty of the liabilities Nature of the liabilities Diversification Existing portfolio Return (expected long-term) ``` ``` Tax treatment of the assets / investor Restrictions - statutory / legal / voluntary Accrual of liabilities in the future Currency of the existing liabilities Term of the existing liabilities Other funds’ strategies (competition) Risk appetite Solvency and accounting requirements ```

Answer 15

STATiC ``` Spurious Time Adverse Temporary initial Class ```

Answer 16

SYSTEM T Security (default and other risks) Yield (real or nominal, running yield, expected return, compare with other assets) Spread (volatility of market values, diversification) Term Expenses or Exchange rate Marketability Tax

Answer 17

TECH SCAM Types of assets that a provider can invest in Extent to which mismatching is allowed Currency matching requirement Hold certain assets, eg government bonds Single counterparty maximum exposure Custodianship of assets Amount of any one asset used to demo solvency may be restricted Mismatch reserve

Answer 18

TRAINERS ``` Tables eg actuarial mortality tables Reinsurers Abroad (data from overseas contracts) Industry data National statistics Experience investigations on the existing contract Regulatory reports and company accounts Similar contracts ```

Answer 19

TRAITOR ``` Tax position Regulation on investor Assets already held Income / cashflow requirements Tastes (liabilities, education, fashion) Other assets and other investors Risk appetite ```

Answer 20

A POLICY CEASES Auction values Profit (including recovery of costs incurred) O Lapse and re-entry risk Increase in benefits will require underwriting Consistency (with other payouts, premiums paid, and maturity values) Y ``` Competition Expectations Asset share Selection Equity Simplicity and stability ```

Answer 21

ACCREDIT DOT ``` Allow for key drivers Calculations not overly complex Clear results Results validated Easy to collect data Documented Inputs consistent Tailored ``` Data validated Output consistent (over time and with other analyses) Timely production of results

Answer 22

AGE ROT Actions by central bank Globalisation Economic cycle Return Overseas influences Type of investment

Answer 23

BALANCED FLACCID DAFT CRUMB ``` Behaviour of third parties Amounts of claims Latent claims Assumption on distribution New classes Catastrophes Economic conditions Development patterns ``` ``` Frequency of claims Legislation Area (globalisation) Climate change Claim handling procedures Inflation Demand surge ``` Distribution channels Arrangements for profit shares Format of data Third party handlers ``` Competitive pressure Reserving philosophy Unusual / large risks Mix of business Bodily injury claims ```

Answer 24

CAB RIDES Credit rating Accounts / Financial metrics Business outlook ``` Risk-based measures Independent Business Review Default risk implied by market Employer factors Scheme characteristics ```

Answer 25

CALMNESS Q ``` Cancellations Alterations in premium rates Lapses Mix of business New business volumes Endorsements Strike rate Source (persistency / profitability) ``` Quotation volumes

Answer 26

CLOG RUM Credit Liquidity Operational Group Reserve Underwriting Market

Answer 27

CRAFT CRAMPS VENDS DRILLS ``` Catastrophes Reporting delays Accumulations Frequency Trends ``` ``` Currency Reinsurance Amount (severity) Moral hazard Partial payments Settlement delays ``` ``` Volatility Event delays Nil claims Definition Seasonality ``` ``` Distribution Reopened claims Inflation Large claims Latent claims Salvage and subrogation ```

Answer 28

CRAMPERS ``` Credit rating agencies Reinsurers and brokers Auditors Management Policyholders Employees Regulators Shareholders ```

Answer 29

PALACE DICE ``` PRE Asset shares Later durations ( maturity values ) Avoid discontinuities Continuing policyholders Early durations (premiums ) ``` Document clearly Infrequent changes Competition Ease of calculation

Answer 30

REDUCE DOG CRITIC ``` RI share of ultimate claims and RI bad debt Exhaustion of reinsurance and reinsurer Downgrade assumptions Ultimate gross claims (including CHE) Ceded premiums Expenses ``` Dividends Operational losses Gross written premium ``` Catastrophe claims Reserve movements (gross), by COB Inflation Tax Investment returns, split by asset class Claims payment profiles ```

Answer 31

REPEAT CAFE ``` Regular reporting Expert advice Performance measurement Explicit mandates Activism Transparency ``` Clear objectives Appropriate benchmarks Focus on asset allocation Effective decision making and operations

Answer 32

SEMI COMA Size of company Existence of legacy systems Management and staff Integrity of data systems Class of business Organisation (nature of) Method of sale Age of company

Answer 33

TRIM RILLS CRUNCH Trends Risk Inflation Mix ``` Reinsurance IBNR Large claims Light experience Sales channel ``` ``` Cover Regulations Underwriting Nil claims Claims handling Heavy experience ```

Answer 34

RICE AD Risk assessment Investment policy Capital requirements Evaluate existing portfolio Allocate capital between classes Determine return on capital