Acronyms Flashcards

Question

Identification of causes of risk in projects

Answer 1

PNEFCPB Preston North End Football Club Plays Brilliantly

Answer 2

REG CUSHION

Answer 3

SCARCER FILES

Answer 4

SOUNDER TRACTORS

Answer 5

A POLICY CEASES

Answer 6

ACCREDIT DOT

Answer 7

BALANCED FLACCID DAFT CRUMB

Answer 8

CALMNESS Q

Answer 9

CRAFT CRAMPS VENDS DRILLS

Answer 10

PALACE DICE

Answer 11

REDUCE DOG CRITIC

Answer 12

REPEAT CAFE

Answer 13

TRIM RILLS CRUNCH

Answer 14

``` Actuaries Lawyers Providers of benefits Accountants Customer Administrator Shareholders / Financial backers ```

Answer 15

``` Administration systems Marketability Profitability Level and form of benefits Early leaver benefits ``` ``` Discretionary benefits Interests and needs of customers Risk appetite of the parties involved Expenses vs charges Competition Terms and conditions of contract ``` ``` Financing (capital requirements) Accounting implications Consistency with other products Timing of contributions or premiums Options and guarantees Regulatory requirements Subsidies (cross) ```

Answer 16

Benefit improvements for a benefit scheme Accounts and reports (published and internal) Discontinuance / surrender benefits ``` Mergers and acquisitions Excess of assets over liabilities and so whether discretionary benefits can be awarded Disclosure information for beneficiaries Investment strategy Contribution / premium setting Supervisory solvency reports ```

Answer 17

Balance of homogenous groups underlying the data may have changed Economic situation may have changed Social conditions may have changed Trends over time, eg medical, demographic Abnormal fluctuations Random fluctuations Changes in regulation Heterogeneity within the group to which the assumptions will apply Errors in data Recording differences (e.g. in categorization of smoker)

Answer 18

Comparable properties for rent review Age, condition and flexibility of use Location Lease structure Size Tenant quality

Answer 19

Consistency in accounting treatment from year to year Avoiding distortions resulting from contribution fluctuations Recognising the realistic costs of accruing benefits Disclosure of appropriate information

Answer 20

``` Custodian needed Additional admin required Time delays Expenses incurred / expertise needed Regulation poor Political instability Information harder to obtain (and less of it) Language difficulties Liquidity problems Accounting differences Restrictions on foreign ownership / repatriation problems ```

Answer 21

Mismatching domestic liabilities Taxation (may not be able to recover withholding taxes paid) Volatility of currency

Answer 22

``` Chairperson`s / CEO`s statements Investment report Remuneration report Corporate governance report Uncertainty (risk) report Strategic report ```

Answer 23

Commission Overheads Sales / advertising Terminal, eg paying benefits Renewal administration, eg collecting premiums / contributions Asset management Initial administration, eg setting up new client records Design of the contract

Answer 24

``` Corporate structure Regulation and legislation Environmental issues and climate change Accounting standards Tax Economic outlook (eg interest rates, inflation, growth) ``` ``` Governance Risk management requirements Adequacy of capital and solvency New business environment Demographic trends ``` ``` Lifestyle considerations International practice State benefits Technology Social and cultural trends ```

Answer 25

Complicated products Rubbish (ie incompetent) advisor Integrity of advisor lacking, eg due to sales-related payments Model or parameter errors Errors in data relating to beneficiaries State-encouraged but inappropriate actions

Answer 26

Directors benefit costs Investment return over year Membership movements ``` Change in surplus / deficit over year Liabilities accruing over year Assumptions Increase in past service liabilities Method Surplus / deficit ```

Answer 27

Divergence of actual vs expected (show financial effect /significance of) Information to management and for accounts Variance of whole is equal to the sum of the variances from the individual sources Experience monitoring to feedback into ACC Reconcile values for successive years Group into one-off / recurring sources of surplus Executive remuneration schemes (data for) New business strain (show effects of) Check on valuation assumptions and calculations Extra check on valuation data and progressiveness of actual vs expected (show financial effect / significance of)

Answer 28

``` Fit for purpose Expertise available in house Need flexibility Cost of each option Expected number of times used Desired accuracy ```

Answer 29

Factual Indicative Recommendation

Answer 30

Feasibility and cost Impact on frequency / severity / expected value Resulting secondary risks Mitigation required in response to secondary risks

Answer 31

Financing (appropriate price, reserves, capital requirements) Rating agencies Attractiveness to investors Understand better (risks and their financial impact) Determine appropriate control systems ``` Changes over time Regulator Interactions Monitor effectiveness of controls Emerging risk identification ```

Answer 32

General economic uncertainty Recession expected Interest rates expected to rise Depreciation of domestic currency expected

Answer 33

Give confidence in the system Reduce financial crime Inefficiencies in the market corrected (and efficient and orderly markets promoted) Protect consumers

Answer 34

Inflation Short-term interest rates ``` Fiscal deficit Imports / exports Employment rate Returns on alternative investments Currency Economic growth ```

Answer 35

``` Legislation / regulation Use of the assumptions Needs of the client Consistency between assumptions How financially significant is/are the assumption(s) ` ```

Answer 36

Moral hazard eliminated as far as possible Ultimate limit on liability undertaken Data exists with which to price risk Pooling a large number of similar risks Independent risk events Small probability of occurrence

Answer 37

``` Partially transfer Ignore Reduce Accept (retain all) Transfer Evade (avoid) ```

Answer 38

``` Political risks Natural risks Economic risks Financial risks Crime Project risks Business risks ```

Answer 39

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

Answer 40

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

Answer 41

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

Answer 42

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 43

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

Answer 44

Suitable approach (eg increase premiums) 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 45

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

Answer 46

``` 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 47

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

Answer 48

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 49

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

Answer 50

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 51

``` 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 52

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

Answer 53

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 54

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 55

``` 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 56

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

Answer 57

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 58

``` 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 59

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

Answer 60

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

Answer 61

``` 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 62

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

Answer 63

Credit Liquidity Operational Group Reserve Underwriting Market

Answer 64

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

Answer 65

``` 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 66

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

Answer 67

``` 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 68

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

Answer 69

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

Answer 70

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 71

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