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C4 Flashcards

1
Q

416

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 intro:QUIK-SUMM - purpose of stress-testing (4)

risk, complement, Cap-Liq

A

416

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 intro:QUIK-SUMM - purpose of stress-testing (4)

risk, complement, Cap-Liq

  1. RISK: identify & control risk
  2. COMPLEMENT: provide a complement to other risk management tools + simulate shocks
  3. CAPITAL MGMT: support capital management
  4. LIQUIDITY MGMT: improve liquidity management
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2
Q

417

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 purpose:Describe - risk ID, control (regarding purpose of stress-testing)

id concentrations, adjust portfolios

A

417

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 purpose:Describe - risk ID, control (regarding purpose of stress-testing)

id concentrations, adjust portfolios

  1. RISK ID: identify concentrations & interactions of risks
  2. RISK CONTROL: adjust (individual portfolios, overall business strategy)
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3
Q

418

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 purpose:Describe - complementing other tools (regarding purpose of stress-testing)

value at risk, simulate shocks..

A

418

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 purpose:Describe - complementing other tools (regarding purpose of stress-testing)

value at risk, simulate shocks..

  1. Test statistical models USED to determine Value-at-Risk
  2. Simulate SHOCKS to test model robustness to economic changes
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4
Q

419

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 purpose:Describe - supporting Capital Management (regarding purpose of stress-testing)

severe/compounding events

A

419

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 purpose:Describe - supporting Capital Management (regarding purpose of stress-testing)

severe/compounding events

  • Identify SEVERE events and/or COMPOUNDING events that impact capital requirements
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5
Q

420

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 purpose:Describe - improving Liquidity Management (regarding purpose of stress-testing)

assess liquidity profile..

A

420

CIA.DCAT 1,2: INTRO & METHOD

Qz-1 purpose:Describe - improving Liquidity Management (regarding purpose of stress-testing)

assess liquidity profile..

  • ASSESS liquidity profile & adequacy of buffers FOR institutional & market-wide stresses
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6
Q

421

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:QUIK-SUMM - steps in the DCAT process (7)

A

421

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:QUIK-SUMM - steps in the DCAT process (7)

  1. Review
  2. BASE scenario
  3. Risk
  4. PAS
  5. Report
  6. Management actions
  7. Regulato actions
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7
Q

422

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 1 - review (1)/7

A

422

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 1 - review (1)/7

  1. REVIEW: 3 years operations & financial position @ end of each year
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8
Q

423
E (2019.Spring 19a.) 0.500 pts

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 2 - BASE (2)/7

A

423
E (2019.Spring 19a.) 0.500 pts

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 2 - BASE (2)/7

  • BASE scenario:
    1. CREATE a set of assumptions on risk factors
    2. Should be CONSISTENT with business plan (if plan is realistic & consistent)
    3. Should COVER the forecast period
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9
Q

424

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 3 - risk (3)/7

..SensTest..

A

424

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 3 - risk (3)/7

..SensTest..

  • RISK CATEGORIES: select relevant risk categories from F-PIP-RIGOR using sensitivity-testing
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10
Q

425

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 4 - PAS (4)/7

A

425

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 4 - PAS (4)/7

  • PAS: select plausible adverse scenarios from the risk categories identified in step 3
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11
Q

426

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 5 - report (5)/7

A

426

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 5 - report (5)/7

  • REPORT: scenarios with highest surplus sensitivity & those where surplus < (supervisory capital required)
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12
Q

427

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 6 - Action(management) (6)/7

RskMit.ContPlan

A

427

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 6 - Action(management) (6)/7

RskMit.ContPlan

  • ACTION (by management): identify management action to facilitiate risk mitigation & contingency planning
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13
Q

428

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 7 - Action(regulator) (7)/7

+ sign

A

428

CIA.DCAT 1,2: INTRO & METHOD

Qz-2 method:Describe DCAT process step 7 - Action(regulator) (7)/7

+ sign

  • ACTION (by regulator): identify possible regulatory action for falling below regulatory capital required (& SIGN opinion)
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14
Q

429

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 forecast period:What should the length of the DCAT forecast period be & what is a consideration in determining the length

A

429

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 forecast period:What should the length of the DCAT forecast period be & what is a consideration in determining the length

  1. At least 3 years for P&C insurance
  2. Consideration: long enough to (capture adversity, give management time to react)
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15
Q

433

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘adverse scenario’

A

433

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘adverse scenario’

  1. A scenario with an adverse outcome on the insurer’s financial condition
  2. Developed by stress-testing assumptions (risk factors) used in forecasting the business plan
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16
Q

434
E (2018.Spring 19a.) 0.250 pts

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘plausible adverse scenario’

set of assmps..

A

434
E (2018.Spring 19a.) 0.250 pts

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘plausible adverse scenario’

set of assmps..

  1. (set of assumptions) for an (undesirable but reasonably possible event) relating to (insurer’s financial condition)
  2. Statsitically, the scenario should lie between the 95th and 99th percentile on the loss distribution.
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17
Q

435

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘integrated scenario’ & give an example

A

435

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘integrated scenario’ & give an example

  1. An integrated scenario is a combination of 2 or more simpler adverse scenarios
  2. Example: combine a low probability scenario with & high probability scenario
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18
Q

436
E (2017.Fall 23a.ii) 0.250 pts

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:List two methods of selecting Plausible Adverse Secenarios (2)

A

436
E (2017.Fall 23a.ii) 0.250 pts

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:List two methods of selecting Plausible Adverse Secenarios (2)

  1. METHOD 1: pick a scenario that falls between the 95th and 99th percentile of the loss distribution
    • Adverse scenario requires > 95th percentile
    • Plausible scenario requires < 99th percentile)
  2. METHOD 2: reverse stress-testing
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19
Q

437
E (2014.Fall 26a.) 0.500 pts

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘reverse stress testing’

how far risk factors..

A

437
E (2014.Fall 26a.) 0.500 pts

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘reverse stress testing’

how far risk factors..

  • HOW FAR must risk factors change TO DRIVE the insurer’s surplus negative during forecast period THEN determine whether such change is plausible
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20
Q

438

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘ripple effect’

an event that occurs when..

A

438

CIA.DCAT 1,2: INTRO & METHOD

Qz-3 PAS:Define ‘ripple effect’

an event that occurs when..

  • An event that occurs WHEN an adverse scenario triggers a change in 1 or more interdependent assumptions
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21
Q

439

CIA.DCAT 1,2: INTRO & METHOD

PAS:List some common examples of ripple effects (7)

A

439

CIA.DCAT 1,2: INTRO & METHOD

PAS:List some common examples of ripple effects (7)

  1. Higher LR (higher losses or operating costs)
  2. Loss of reinsurance
  3. Post-event inflation
  4. Forced sale or liquidation
  5. Mix shift
  6. Policy holder actions
  7. Regulatory actions
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22
Q

440

CIA.DCAT 1,2: INTRO & METHOD

Qz-6 PAS:List some common examples of management actions (5)

A

440

CIA.DCAT 1,2: INTRO & METHOD

Qz-6 PAS:List some common examples of management actions (5)

  1. Tighten U/W criteria
  2. Increase rates
  3. Review reinsurance
  4. Sell assets
  5. Review mix (by geography, limit,..)
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23
Q

441

CIA.DCAT 3: MODELING

Qz-4 basic reqs:What are the basic requirements of a DCAT model (3)

reproduce..

A

441

CIA.DCAT 3: MODELING

Qz-4 basic reqs:What are the basic requirements of a DCAT model (3)

reproduce. .
* REPRODUCE key elements of financial statements:

  1. B/S items - assets, liabilities, equity
  2. Income Statement items - revenue, expenses
  3. Regulatory measures of capital adequacy
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24
Q

442

CIA.DCAT 3: MODELING

Qz-4 model validation:How does an actuary validate a DCAT model in a static environment

Base continuity:CLS

A

442

CIA.DCAT 3: MODELING

Qz-4 model validation:How does an actuary validate a DCAT model in a static environment

Base continuity:CLS

  • Usually tested with base scenario:
    • Base scenario usually shows continuity of results from year-to-year (cash, liabilities, surplus,..)
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25
Q

444

CIA.DCAT 4: REPORTING

Qz-5 intro:Purpose of DCAT report

A

444

CIA.DCAT 4: REPORTING

Qz-5 intro:Purpose of DCAT report

  1. COMMUNICATION to Board of Directors: identify risks & ways to reduce risk
  2. IN OTHER WORDS: report on the financial condition of insurer & things to improve
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26
Q

445

CIA.DCAT 4: REPORTING

Qz-5 intro:What are the different audiences for a DCAT report (3)

Bmr

A

445

CIA.DCAT 4: REPORTING

Qz-5 intro:What are the different audiences for a DCAT report (3)

Bmr

  1. Board of Directors: prefers an interpretive summary versus a detailed statistical report
  2. Management: receives a more detailed report
  3. Regulator: focuses on solvency issues
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27
Q

446
E (2018.Fall 20f.) 0.500 pts

CIA.DCAT 4: REPORTING

Qz-5 intro:When can actuary report that the financial condition of an insurer is satisfactory

A

446
E (2018.Fall 20f.) 0.500 pts

CIA.DCAT 4: REPORTING

Qz-5 intro:When can actuary report that the financial condition of an insurer is satisfactory

  • For (BASE scenario):
    1. supervisory capital requirements must be met
    2. which means MCT > 150% (ALL YRS)
  • For (BASE scenario, all PAS):
    1. assets > liabilities (ALL YRS)
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28
Q

447
E (2018.Spring 19d.) 0.500 pts

CIA.DCAT 4: REPORTING

intro:When can actuary report that the financial condition of an insurer is satisfactory

A

447
E (2018.Spring 19d.) 0.500 pts

CIA.DCAT 4: REPORTING

intro:When can actuary report that the financial condition of an insurer is satisfactory

  • For (BASE scenario):
    1. supervisory capital requirements must be met
    2. which means MCT > 150% (ALL YRS)
  • For (BASE scenario, all PAS):
    1. assets > liabilities (ALL YRS)
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29
Q

448

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB intro:What are the P&C Insurer Risk Categories pertaining to DCAT

F-PIP-RIGOR

A

448

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB intro:What are the P&C Insurer Risk Categories pertaining to DCAT

F-PIP-RIGOR

  • F:
    1. Frequency & severity
  • PIP:
    1. Policy liabilities
    2. Inflation
    3. Premium
  • RIGOR:
    1. Reinsurance & counter-parties
    2. Investment risk
    3. Government risk
    4. Off-B/S risk
    5. Related company risk
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30
Q

449

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.1) give examples of causes, ripple effects, and management actions for the Frequency & Severity risk category

A

449

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.1) give examples of causes, ripple effects, and management actions for the Frequency & Severity risk category

  1. CAUSE: catastrophe, social inflation
  2. RIPPLE EFFECT: post-event inflation, loss of reinsurance
  3. MANAGEMENT ACTIONS: raise rates, review reinsurance
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31
Q

450
E (2013.Fall 29d.) 0.500 pts

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.2) give examples of causes, ripple effects, and management actions for the Policy Liabilities risk category

A

450
E (2013.Fall 29d.) 0.500 pts

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.2) give examples of causes, ripple effects, and management actions for the Policy Liabilities risk category

  1. CAUSE: inadequate LDFs, class action lawsuits
  2. RIPPLE EFFECTS: forced sale or liquidation, rating agency downgrade
  3. MANAGEMENT ACTIONS: increase rates, review mix
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32
Q

451

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.3) give examples of causes, ripple effects, and management actions for the Inflation risk category

A

451

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.3) give examples of causes, ripple effects, and management actions for the Inflation risk category

  1. CAUSE: (rapid, sustained) increase OR (temporary) increase in (labour, materials) due to catastrophe
  2. RIPPLE EFFECTS: increase in operating costing, reinsurance
  3. MANAGEMENT ACTIONS: increase rates, review mix
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33
Q

452

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.4a) give examples of causes, ripple effects, and management actions for the Premium risk category (higher volume than expected)

A

452

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.4a) give examples of causes, ripple effects, and management actions for the Premium risk category (higher volume than expected)

  1. CAUSE: inadequate rates, withdrawal of competitor
  2. RIPPLE EFFECTS: deteriorating LR, increased expenses (new staff, overtime)
  3. MANAGEMENT ACTIONS: raise rates, hire more staff
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34
Q

453
E (2013.Fall 29c.) 0.500 pts

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.4b) give examples of causes, ripple effects, and management actions for the Premium risk category (lower volume than expected)

A

453
E (2013.Fall 29c.) 0.500 pts

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.4b) give examples of causes, ripple effects, and management actions for the Premium risk category (lower volume than expected)

  1. CAUSE: rates too high, new competitor
  2. RIPPLE EFFECTS: mix shift, increased fixed exp ratio
  3. MANAGEMENT ACTIONS: review mix, lower rates
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35
Q

454

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.5) give examples of causes, ripple effects, and management actions for the Reinsurance & counterparty risk category

A

454

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.5) give examples of causes, ripple effects, and management actions for the Reinsurance & counterparty risk category

  1. CAUSE: reinsurer insolvency, reinsurer dispute
  2. RIPPLE EFFECTS: reinsurance rate increase for replacement reinsurer, reduced reimbursement
  3. MANAGEMENT ACTIONS: review reinsurance: diversify or change reinsurer
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36
Q

455

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.6) give examples of causes, ripple effects, and management actions for the Investment risk category

A

455

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.6) give examples of causes, ripple effects, and management actions for the Investment risk category

  1. CAUSE: significant change in yield curve, decrease in returns on equity investments
  2. RIPPLE EFFECTS: forced sale or liquidation, significant change in cash flows
  3. MANAGEMENT ACTIONS: sell assets, change investment strategy
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37
Q

456

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.7) give examples of causes, ripple effects, and management actions for the Govt risk category

A

456

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.7) give examples of causes, ripple effects, and management actions for the Govt risk category

  1. CAUSE: rate freeze/rollback, change in solvency standards requiring increase in capital
  2. RIPPLE EFFECTS: LR up, forced sale
  3. MANAGEMENT ACTIONS: tighten U/W, review reinsurance and/or mix of business
38
Q

457
E (2017.Fall 22c.) 0.750 pts

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.8a) give examples of causes, ripple effects, and management actions for the Off-B/S risk category

A

457
E (2017.Fall 22c.) 0.750 pts

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.8a) give examples of causes, ripple effects, and management actions for the Off-B/S risk category

  1. CAUSE: derivative risk, pension underfunding
  2. RIPPLE EFFECTS: forced sale or liquidation, significant changes in cash flows
  3. MANAGEMENT ACTIONS: reposition derivatives, change pension from defined benefit to defined contribution
39
Q

458

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.8b) explain what is meant by ‘derivatives’ risk

mkt = liq + bas

A

458

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.8b) explain what is meant by ‘derivatives’ risk

mkt = liq + bas

  • Components of derivative risk are liquidity risk & basis risk
    1. Liquidity risk means: can’t unwind contract (when desired or for a low price)
    2. Basis risk means: price behavior unexpected; undoes hedging
40
Q

459

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.9) give examples of causes, ripple effects, and management actions for the Related company risk category

A

459

CIA.DCAT AppB: RISK CATEGORIES

Qz-6 AppB:(B.9) give examples of causes, ripple effects, and management actions for the Related company risk category

  1. CAUSE: reduction in parent support, rating agency downgrade at group level
  2. RIPPLE EFFECTS: management too focused on group - delays remediation for individual insurer
  3. MANAGEMENT ACTIONS: find alternate sources of funding
41
Q

468
E (2017.Fall 23b.) 1.000 pts

CIA.DCAT Supp: Extra Exam Problems

Qz-5 AppB misc:For a premium volume adverse scenario, describe a (i) cause, (ii) adverse assumption, (iii) ripple effect (iv) mgmt action

A

468
E (2017.Fall 23b.) 1.000 pts

CIA.DCAT Supp: Extra Exam Problems

Qz-5 AppB misc:For a premium volume adverse scenario, describe a (i) cause, (ii) adverse assumption, (iii) ripple effect (iv) mgmt action

  1. (i) cause: relaxation of U/W standards
  2. (ii) adverse assumption: large increase in premium
  3. (iii) ripple effect: deteriorating loss ratio
  4. (iv) management action: raise rates
42
Q

479
E (2017.Fall 22b.) 0.750 pts

CIA.DCAT Supp: Extra Exam Problems

Qz-7 AppB misc:Define social inflation and it’s effect on a company

A

479
E (2017.Fall 22b.) 0.750 pts

CIA.DCAT Supp: Extra Exam Problems

Qz-7 AppB misc:Define social inflation and it’s effect on a company

  • it is claims inflation resulting from: changes in (likelihood, size) of claims, standards of liability, attitudes of claimants
  • Increased claims may cause increase in reserves and higher rates
43
Q

484
E (2016.Fall 20a.) 0.500 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 intro:Defn of ‘stress-testing’ (general)

a risk management technique..

A

484
E (2016.Fall 20a.) 0.500 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 intro:Defn of ‘stress-testing’ (general)

a risk management technique..

  • A risk management technique
    1. ==> TO EVALUATE effects on financial condition..
    2. ==> due to SPECIFIED CHANGES in risk factors..
    3. ==> corresponding to exceptional but plausible events
44
Q

485
E (2017.Fall 24.i) 2.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 intro:QUIK-SUMM - purpose of stress-testing (4)

risk, complement, Cap-Liq

A

485
E (2017.Fall 24.i) 2.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 intro:QUIK-SUMM - purpose of stress-testing (4)

risk, complement, Cap-Liq

  1. RISK:
    • Identify & control risk
  2. COMPLEMENT:
    • Provide a complement to other risk management tools + simulate shocks
  3. CAPITAL MANAGEMENT:
    • Support capital management
  4. LIQUIDITY MANAGEMENT:
    • Improve liquidity management
45
Q

486
E (2017.Fall 24b.ii) 0.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe - risk ID, control (regarding purpose of stress-testing)

id concentrations, adjust portfolios

A

486
E (2017.Fall 24b.ii) 0.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe - risk ID, control (regarding purpose of stress-testing)

id concentrations, adjust portfolios

  1. Risk ID:
    • Identify concentrations & interactions of risks
  2. Risk CONTROL:
    • Adjust individual portfolios & overall business strategy
46
Q

487
E (2017.Fall 24b.iii) 0.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe - complementing other tools (regarding purpose of stress-testing)

value at risk, simulate shocks..

A

487
E (2017.Fall 24b.iii) 0.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe - complementing other tools (regarding purpose of stress-testing)

value at risk, simulate shocks..

  1. Test statistical models USED to determine VaR (Value at Risk)
  2. Simulate SHOCKS to test model robustness to economic changes
47
Q

488
E (2017.Fall 24b.iv) 0.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe - supporting Capital Management (regarding purpose of stress-testing)

severe/compounding events

A

488
E (2017.Fall 24b.iv) 0.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe - supporting Capital Management (regarding purpose of stress-testing)

severe/compounding events

  • Identify SEVERE events and/or COMPOUNDING events that impact capital requirements
48
Q

489
E (2017.Fall 24b.v) 0.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe - improving Liquidity Management (regarding purpose of stress-testing)

assess liquidity profile..

A

489
E (2017.Fall 24b.v) 0.000 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe - improving Liquidity Management (regarding purpose of stress-testing)

assess liquidity profile..

  • ASSESS liquidity profile & adequacy of buffers FOR institutional & market-wide stresses
49
Q

490
E (2018.Fall 22a.) 0.500 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe how stress-testing is a key risk management tool for coverage of overland flooding

A

490
E (2018.Fall 22a.) 0.500 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 purpose:Describe how stress-testing is a key risk management tool for coverage of overland flooding

  • Company won’t have historical data
    1. ==> identify flood risks using stress-testing models
    2. ==> estimate capital required to support flood risk in different scenarios
    3. ==> stress-testing could complement publicly available flood data
50
Q

491
E (2018.Fall 22b.) 0.500 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 role (Board of Directors, Mgmt):Describe board versus management responsibilities regarding a stress-testing program (3,3)

A

491
E (2018.Fall 22b.) 0.500 pts

OSFI.STRESS ABC: DEFN, PURPOSE, ROLE (Board of Directors,Mgmt)

Qz-1 role (Board of Directors, Mgmt):Describe board versus management responsibilities regarding a stress-testing program (3,3)

  • Board of Director’s responsibilities:
    1. Ultimate responsibility for program
    2. Ensures implementation of program by management
    3. Should be aware of key findings
  • Management’s responsibilities:
    1. Implement & manage stress-testing program
    2. Identify PAS (Plausible Adverse Scenario)
    3. Develop& implement risk mitigation strategies
51
Q

492
E (2014.Spring 27b.) 1.500 pts

OSFI.STRESS D: GENERAL CONSIDERATIONS

Qz-2 gen:Rudimentary stress-testing considerations (4)

RUDI

A

492
E (2014.Spring 27b.) 1.500 pts

OSFI.STRESS D: GENERAL CONSIDERATIONS

Qz-2 gen:Rudimentary stress-testing considerations (4)

RUDI

  1. RANGE: (range of perspectives, techniques)
    • Perspectives: consult economists, actuaries, others
    • Techniques: qualitative, quantitative
  2. UPDATES: (update stress-testing framework regularly)
    • Monitor EFFECTIVENESS of framework with (qualitative, quantitative) measures & UPDATE accordingly
    • Elements of a framework include: docs, data quality, assumptions,..
  3. DOCS:
    • Provide written docs of assumptions & fundamental elements of scenarios
  4. INFRASTRUCTURE: (should be flexible)
    • Should allow increase in SENSITIVITY TESTING in times of rapid change
    • Should accommodate TIME HORIZONS for management action
52
Q

494
E (2017.Spring 22.) 0.000 pts

OSFI.STRESS EFG (Glossary): METHODS, FOCUS, SUPERVISION

Qz-3 E:Considerations in scenario selection (3)

allLOBs.non-historical.downturns

A

494
E (2017.Spring 22.) 0.000 pts

OSFI.STRESS EFG (Glossary): METHODS, FOCUS, SUPERVISION

Qz-3 E:Considerations in scenario selection (3)

allLOBs.non-historical.downturns

  1. Scenarios should cover all important BUSINESS & PRODUCT lines
  2. Create NON-HISTORICAL scenarios (events that haven’t happened but COULD happen)
  3. Severe & sustained DOWNTURNS (includes large losses, loss of reputation, legal problems,..)
53
Q

498

OSFI.STRESS EFG (Glossary): METHODS, FOCUS, SUPERVISION

Qz-3 F:Focus areas in response to financial market turmoil (5)

R(Sec)RCC

A

498

OSFI.STRESS EFG (Glossary): METHODS, FOCUS, SUPERVISION

Qz-3 F:Focus areas in response to financial market turmoil (5)

R(Sec)RCC

  1. Risk mitigation
  2. S&W (Securitization & Warehousing)
  3. Reputation (reputational risk)
  4. Credit risk (& Counter-party Risk)
  5. Concentration risk
54
Q

500

OSFI.STRESS EFG (Glossary): METHODS, FOCUS, SUPERVISION

Qz-3 G:OSFI’s considerations in assessing stress-test program (4)

A

500

OSFI.STRESS EFG (Glossary): METHODS, FOCUS, SUPERVISION

Qz-3 G:OSFI’s considerations in assessing stress-test program (4)

  1. APPROPRIATENESS:
    • Are scenarios appropriate for institution’s risk profile
  2. VIABILITY:
    • Are scenarios included that compromise viability
  3. FREQUENCY:
    • Is stress-tesing frequent enough for timely management action
  4. SEVERE SHOCKS:
    • Do scenarios include severe shocks & sustained downturns)
55
Q

501
E (2016.Fall 20c.i) 0.500 pts

OSFI.STRESS EFG (Glossary): METHODS, FOCUS, SUPERVISION

Qz-3 Glossary:Describe & contrast scenario with sensitivity testing

complexity & resources

A

501
E (2016.Fall 20c.i) 0.500 pts

OSFI.STRESS EFG (Glossary): METHODS, FOCUS, SUPERVISION

Qz-3 Glossary:Describe & contrast scenario with sensitivity testing

complexity & resources

  • SCENARIO-TESTING:
    1. Significant changes to risk factors
    2. Observe future state including ripple effects & management actions over a longer time horizon
    3. More complex & comprehensive
  • SENSITIVITY-TESTING:
    1. Incremental changes to risk factors
    2. Shock is more immediate & time horizon shorter
    3. Simpler fewer resources required
56
Q

502
E (2017.Fall 1a.) 0.750 pts

McD A: Introduction

Qz-1 intro:Sect 91 (BNA Act): identify FEDERAL areas of exclusive authority (this is not specific to insurance) (6)

A

502
E (2017.Fall 1a.) 0.750 pts

McD A: Introduction

Qz-1 intro:Sect 91 (BNA Act): identify FEDERAL areas of exclusive authority (this is not specific to insurance) (6)

  1. Regulation of (trade, commerce)
  2. Taxation
  3. Banking
  4. (bankruptcy, insolvency)
  5. Aliens & naturalization
  6. Criminal law
57
Q

503
E (2017.Fall 1b.i) 0.375 pts

McD A: Introduction

Qz-1 intro:Sect 92 (BNA Act): identify PROVINCIAL areas of exclusive authority (this is not specific to insurance) (4)

A

503
E (2017.Fall 1b.i) 0.375 pts

McD A: Introduction

Qz-1 intro:Sect 92 (BNA Act): identify PROVINCIAL areas of exclusive authority (this is not specific to insurance) (4)

  1. Provincial taxes
  2. Civil property rights
  3. Hiring & supervising provincial employees
  4. Operating jails & hospitals
58
Q

504

McD A: Introduction

Qz-1 intro:Define intra vires, ultra vires

A

504

McD A: Introduction

Qz-1 intro:Define intra vires, ultra vires

  1. INTRA VIRES: within the powers of a particular Govt
  2. ULTRA VIRES: beyond the powers of a particular Govt
59
Q

505

McD A: Introduction

Qz-2 Citizens Ins v Parsons:Facts (1881)

fire ch5

A

505

McD A: Introduction

Qz-2 Citizens Ins v Parsons:Facts (1881)

fire ch5

  • Insurer disuptes ON’s Fire Insurance Act
    • The Act required certain statutory conditions for fire policies in ON
60
Q

506
E (2012.Fall 2a.i) 1.000 pts

McD A: Introduction

Qz-2 Citizens Ins v Parsons:Issues (Recall: Citizen’s - ultra)

regulation of trade, deprive status & capacity

A

506
E (2012.Fall 2a.i) 1.000 pts

McD A: Introduction

Qz-2 Citizens Ins v Parsons:Issues (Recall: Citizen’s - ultra)

regulation of trade, deprive status & capacity

  1. ISSUE 1:
    • Is ON Fire Act ULTRA VIRES? (relates to regulation of trade, which is federal)
  2. ISSUE 2
    • Insurer claims province can’t legislate to deprive federally incorporated insurer of status & capacity
61
Q

507
E (2012.Fall 2a.ii) 0.250 pts

McD A: Introduction

Qz-2 Citizens Ins v Parsons:Ruling-JCPC on issue #1 (Judicial Committee of the Privy Concil)

trade regulation is INTER-provincial not intra-provincial

A

507
E (2012.Fall 2a.ii) 0.250 pts

McD A: Introduction

Qz-2 Citizens Ins v Parsons:Ruling-JCPC on issue #1 (Judicial Committee of the Privy Concil)

trade regulation is INTER-provincial not intra-provincial

  • Ruling (Issue 1):
    1. ON Fire Act is INTRA VIRES
  • Reason:
    1. Federal government can’t regulate an insurer operating in a single province
    2. trade means INTER-provincial (not INTRA-provincial)
62
Q

508
E (2012.Fall 2a.iii) 0.250 pts

McD A: Introduction

Qz-2 Citizens Ins v Parsons:Ruling-JCPC on issue #2

A

508
E (2012.Fall 2a.iii) 0.250 pts

McD A: Introduction

Qz-2 Citizens Ins v Parsons:Ruling-JCPC on issue #2

  • Ruling (Issue 2)
    1. Status & capacity UNAFFECTED
    2. Insurers are all treated equally, regardless of where they were incorporated
63
Q

509
E (2018.Fall 2a.i) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB): Facts (1916)

federal license required..except..

A

509
E (2018.Fall 2a.i) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB): Facts (1916)

federal license required..except..

  • (1910) The Federal Insurance Act required a Federal license of all insurers..
    • ..EXCEPT IF (incorporated by Province) AND (operating solely in Province)
64
Q

510
E (2018.Fall 2a.ii) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB) - Issues

intra-vires?

A

510
E (2018.Fall 2a.ii) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB) - Issues

intra-vires?

  • Is this version of the Federal Insurance Act ‘intra vires’?
65
Q

511
E (2018.Fall 2a.iii) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB) - Ruling - JCPC (Judicial Committee of the Privy Council)

..licensing system..

A

511
E (2018.Fall 2a.iii) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB) - Ruling - JCPC (Judicial Committee of the Privy Council)

..licensing system..

  • Licensing provisions are ‘ultra vires’:
    • Regulation of trade/commerce didn’t extend to a licensing system of a particular trade
    • Trespasses on Provincial authority in civil rights
      1. (not covered by Federal power to legislate for Peace, Order, Good Government)
66
Q

512
E (2018.Fall 2a.iv) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB) - Implication-Canada

capacity-right

A

512
E (2018.Fall 2a.iv) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB) - Implication-Canada

capacity-right

  1. A provincial insurer has the capacity, but not the right to operate in another Province
    • (need permission from other province)
  2. Federal insurer has the capacity and the right to operate in another province
  • These are the 2 ways an insurer can operate in more than 1 province
67
Q

513
E (2018.Fall 2a.v) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB) - Implication-Foreign

A

513
E (2018.Fall 2a.v) 0.100 pts

McD A: Introduction

Qz-2 Insurance Reference Case:AG(Can) v AG(AB) - Implication-Foreign

  1. Federal government can require a federal license for a foreign insurer
  2. (even if the foreign insurer is operating in only 1 province)
68
Q

514

McD A: Introduction

Qz-2 BC Public Auto:CIC v AG(BC): Facts (3)

public auto

A

514

McD A: Introduction

Qz-2 BC Public Auto:CIC v AG(BC): Facts (3)

public auto

  1. BC legislature establishes compulsory public auto insurance plan
    1. Legislature refuses license renewal of private insurers
    2. Insurers sue
69
Q

515

McD A: Introduction

Qz-2 BC Public Auto:CIC v AG(BC): Arguments

A

515

McD A: Introduction

Qz-2 BC Public Auto:CIC v AG(BC): Arguments

  • Insurers claimed BC legislation is ULTRA VIRES for 2 reasons:
    1. It relates to regulation of trade, which is federal
    2. Province can’t legislate to deprive federally incorporated insurer of status &capacity
70
Q

516

McD A: Introduction

Qz-2 BC Public Auto:CIC v AG(BC): Rulings (Supreme Court)

A

516

McD A: Introduction

Qz-2 BC Public Auto:CIC v AG(BC): Rulings (Supreme Court)

  • BC legislature acted within its powers (legislation is INTRA VIRES)
71
Q

517
E (2014.Spring 1c.i) 0.500 pts

McD A: Introduction

Qz-3 supp:Identify of examples FEDERAL regulation/legislation regarding insurer solvency (5)

CIRC-P

A

517
E (2014.Spring 1c.i) 0.500 pts

McD A: Introduction

Qz-3 supp:Identify of examples FEDERAL regulation/legislation regarding insurer solvency (5)

CIRC-P

  1. CONDITIONS for entering business
  2. INVESTMENTS
  3. Regular REPORTING
  4. CALCULATION of assets & reserves
  5. PROTECT policy holders
72
Q

518
E (2018.Fall 1ab.) 1.500 pts

McD A: Introduction

Qz-1 supp:Areas & matters under PROVINCIAL insurance legislation/regulation

A

518
E (2018.Fall 1ab.) 1.500 pts

McD A: Introduction

Qz-1 supp:Areas & matters under PROVINCIAL insurance legislation/regulation

  1. CONTRACT MATTERS: (ppp-ird)
    • (policy contents), (policy terms), (premium payment), (insurable interest), (reinstatement), (designation of beneficiaries)..
  2. TRANSACTION MATTERS: (AUC)
    • (Agent licensing), (Unfair practices), (Claims handling)
73
Q

520
E (2018.Fall 2b.) 1.000 pts

McD A: Introduction

Qz-3 supp:OSFI licensing requirements for domestic insurers (for Minister of Finance to approve letters patent) (6)

$(plan, record, competence, jobs) & fair treatment by foreign owners

A

520
E (2018.Fall 2b.) 1.000 pts

McD A: Introduction

Qz-3 supp:OSFI licensing requirements for domestic insurers (for Minister of Finance to approve letters patent) (6)

$(plan, record, competence, jobs) & fair treatment by foreign owners

  1. Financial resources (must be sufficient)
  2. Business plan (detailed & realistic)
  3. Business record of applicants (check for past bankrupticies)
  4. (character, competence, experience) of management
  5. Positive effect on Canadian financial system (jobs, GDP growth)
  6. If owned by a foreign parent, OSFI must be satisfied that subsidiary will be treated fairly
74
Q

521

McD A: Introduction

Qz-3 supp:Identify reasons for insurance regulation in Canada (3)

(Prevent..)-(Prevent..)-(..EcoImpact..)

A

521

McD A: Introduction

Qz-3 supp:Identify reasons for insurance regulation in Canada (3)

(Prevent..)-(Prevent..)-(..EcoImpact..)

  1. PREVENT insolvencies
  2. PREVENT undesirable business practices
  3. Consider ECONOMIC IMPACT on Canada
75
Q

522
E (2017.Spring 1b.) 0.500 pts

McD A: Introduction

Qz-3 supp:Identify of examples FEDERAL regulation/legislation regarding insurer solvency (5)

CIRC-P

A

522
E (2017.Spring 1b.) 0.500 pts

McD A: Introduction

Qz-3 supp:Identify of examples FEDERAL regulation/legislation regarding insurer solvency (5)

CIRC-P

  1. CONDITIONS for entering business
  2. INVESTMENTS
  3. Regular REPORTING
  4. CALCULATION of assets & reserves
  5. PROTECT policy holders
76
Q

523

ORSA (I,II,III): INTRODUCTION, SCOPE, ERM

Qz-1 intro:What is the general goal of ORSA

(risk profile)-(capital needs)

A

523

ORSA (I,II,III): INTRODUCTION, SCOPE, ERM

Qz-1 intro:What is the general goal of ORSA

(risk profile)-(capital needs)

  • Enhance insurers’ understanding of the relationship between (risk profile, capital needs)
77
Q

524

ORSA (I,II,III): INTRODUCTION, SCOPE, ERM

Qz-1 intro:Does OSFI approve an insurer’s ORSA

A

524

ORSA (I,II,III): INTRODUCTION, SCOPE, ERM

Qz-1 intro:Does OSFI approve an insurer’s ORSA

  • NO, but OSFI will REVIEW a company’s ORSA as part of its assessment of the company
78
Q

525

ORSA (I,II,III): INTRODUCTION, SCOPE, ERM

Qz-1 ERM:What is the relationship between ERM (Enterprise Risk Management) & ORSA

A

525

ORSA (I,II,III): INTRODUCTION, SCOPE, ERM

Qz-1 ERM:What is the relationship between ERM (Enterprise Risk Management) & ORSA

  • (ERM, ORSA) should be WELL-INTEGRATED so that (analysis, results) are consistent between them
79
Q

526
E (2015.Fall 23a.) 1.500 pts

ORSA IV: KEY ELEMENTS

Qz-2 keys:Identify ORSA’s key elements (5)

RRR(M&R)(I&O)

A

526
E (2015.Fall 23a.) 1.500 pts

ORSA IV: KEY ELEMENTS

Qz-2 keys:Identify ORSA’s key elements (5)

RRR(M&R)(I&O)

  1. RISK identification & assessment
  2. RELATE risk to capital
  3. RESPONSIBILITIES of Board of Directors
  4. (M&R) MONITORING & REPORTING of risks
  5. (I&O) INTERNAL controls & OBJECTIVE review
80
Q

527

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘risk identification & assessment’

id & assess materiality..

A

527

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘risk identification & assessment’

id & assess materiality..

  • Identify & assess the MATERIALITY of forseeable & emerging risks
81
Q

528
E (2018.Spring 20c.) 0.500 pts

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘relating risk to capital’

set ICT..to withstand..

A

528
E (2018.Spring 20c.) 0.500 pts

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘relating risk to capital’

set ICT..to withstand..

  1. Set ICT (Internal Capital Target) using stress-testing techniques
  2. Must WITHSTAND a specified loss without falling below (Supervisery Capital Requirements)
82
Q

529

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘responsibilities of Board of Directors’ (see paper p8, orange box)

reivew reasonableness & appropriateness..

A

529

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘responsibilities of Board of Directors’ (see paper p8, orange box)

reivew reasonableness & appropriateness..

  • REVIEW
    • Reasonableness & appropriateness
  • OF
    • Risk profile & capital requirements
  • IN
    • The context of board-approved risk appetite & risk tolerance
83
Q

530

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘Monitoring & Reporting’

annual reports to..

A

530

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘Monitoring & Reporting’

annual reports to..

  • ANNUAL REPORTS to (Board of Directors, Senior Managment) on risk profile & capital management
84
Q

531

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘Internal control & Objective review’

review for accuracy..objective reviewer is..

A

531

ORSA IV: KEY ELEMENTS

Qz-2 keys:Describe the ORSA key element ‘Internal control & Objective review’

review for accuracy..objective reviewer is..

  1. REVIEW for (accuracy, integrity, reasonableness)
  2. OBJECTIVE REVIEWER: internal or external auditor OR skilled professional not involved in the ORSA process
85
Q

532
E (2015.Fall 23b.) 0.500 pts

ORSA IV: KEY ELEMENTS

Qz-2 keys:Is ORSA process the same for all federal insurers

A

532
E (2015.Fall 23b.) 0.500 pts

ORSA IV: KEY ELEMENTS

Qz-2 keys:Is ORSA process the same for all federal insurers

  1. YES and NO:
    • Key elements are the same (list them)
  2. BUT
    • Specifics differ by company DEPENDING on risk profile & NSC (Nature/Scale/Complexity) of operations
86
Q

533
E (2016.Fall 24e.) 0.500 pts

ORSA IV: KEY ELEMENTS

Qz-2 keys:Should ORSA be used to set ICT (Internal Capital Target)

A

533
E (2016.Fall 24e.) 0.500 pts

ORSA IV: KEY ELEMENTS

Qz-2 keys:Should ORSA be used to set ICT (Internal Capital Target)

  • YES:
    • An important part of ORSA is to set ICT (Internal Capital Target) since ICT considers insurer-specific risks
87
Q

534

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

Qz-3 SupRev:What is the relative importance of (quantitative, qualitative) aspects of ORSA

A

534

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

Qz-3 SupRev:What is the relative importance of (quantitative, qualitative) aspects of ORSA

  • Quantitative & qualitative aspects are equally important
88
Q

535

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

Qz-3 APPENDIX:Regarding ORSA key element #2, ‘relating risk to capital’ , identify possible approaches to calculating ICT (Internal Capital Target) (3)

int.simp.qual

A

535

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

Qz-3 APPENDIX:Regarding ORSA key element #2, ‘relating risk to capital’ , identify possible approaches to calculating ICT (Internal Capital Target) (3)

int.simp.qual

  1. COMPLEX INTERNAL MODEL: for complex risks
  2. SIMPLE MODEL: with conservative assumptions
  3. QUALITATIVE: includes expert judgment for difficut-to-quantify risks
89
Q

536
E (2018.Spring 20a.i) 0.250 pts

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

Qz-3 supp:Describe similarities between DCAT & ORSA (3)

if in doubt, start by listing key principles for both DCAT & ORSA

A

536
E (2018.Spring 20a.i) 0.250 pts

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

Qz-3 supp:Describe similarities between DCAT & ORSA (3)

if in doubt, start by listing key principles for both DCAT & ORSA

  1. Both are concerned with risk identification & control
  2. Both are concerned with capital requirements
  3. Both are submitted to BoD (Board of Directors) & regulators
90
Q

537
E (2017.Fall 21b.) 1.500 pts

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

supp: Describe differences between DCAT & ORSA (3)
guidelines. methods.report

A

537
E (2017.Fall 21b.) 1.500 pts

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

supp: Describe differences between DCAT & ORSA (3)
guidelines. methods.report

  1. GUIDELINES:
    • DCAT: uses CIA SOPs (Statement of Principles)
    • ORSA: uses OSFI guidelines
  2. METHODS:
    • DCAT: quantitative only
    • ORSA: qualitative & quantitative
  3. REPORT:
    • DCAT: by AA (Appointed Actuary)
    • ORSA: management responsibility
  4. FORECAST PERIOD
    • DCAT: 3 years
    • ORSA: long enough to capture relevant material risks (Ex: 3-5 years)
91
Q

538
E (2018.Fall 25c.) 2.000 pts

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

Qz-3 supp:Identify advantages of ORSA over MCT

ORSA does a lot more than MCT

A

538
E (2018.Fall 25c.) 2.000 pts

ORSA V: INTERACTION OF ORSA with SUPERVISORY REVIEW

Qz-3 supp:Identify advantages of ORSA over MCT

ORSA does a lot more than MCT

  • ORSA:
    1. |1] includes ALL material rsks
    2. |2] uses stress-testing to set ICT(Internal Capital Target)
    3. |3] qualitative (as well as quantitative)
    4. |4] admits assessment of internal controls
  • MCT: doesn’t do these things

6 (9 decks)

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