Ch 0

Question 1

List 7 applications of the ACC

Answer 1

1) Analyse the problem to identify the risk surrounding the problem.
2) Quantify the financial consequences should the risk identified occur.
3) consider and quantify appropriate methods to manage, mitigate,l and transfer those identified risks.
4) Monitor the situation and the risk management procedures implemented in the development.
5) If the experience is different than expected, modify or change to be a closer fit to the actual experience.
6) Consider the appropriate economic and commercial environment.
7) Apply professionalism at all stages.

Question 2

What makes the ACC actuarial? (11)

Answer 2

1) Estimate the financial impact of uncertain future events.
2) Long-term rather than short-term horizon.
3) Recognize of stakeholders and their risk profiles.
4) Make short-term decisions in the light of expected future outcomes.
5) Use models to represent uncertain future outcomes.
6) Use assumptions based on historical experiences.
7) Allow economic environment - legislation, taxation, and competition.
8) Interpret modelling results in order to arrive at practical strategies.
9) Monitor and periodically analyze the emerging experience.
10) Modify models and assumptions given the emerging experience.
11) Apply professional judgement.

Question 3

List the 3 stages and 2 inputs to the ACC.

Answer 3

Stages:
~ Specify the problem
~ Develop the solution
~ Monitor the experience

Input:
~ Professionalism
~ General and commercial economic environment

Question 4

List what to consider under specify the problem (4)

Answer 4

~ Set the objectives
~ Identify and analyse risks
~ Consider how to manage, mitigate and transfer risks
~ Consider stakeholders

Question 5

List what to consider under develop the solution (9)

Answer 5

~ Consider existing models for the problem
~ Select the appropriate model or build a new one
~ Consider and select assumptions
~ Interpret the results of the model
~ Consider implications of model results on the problem
~ Consider implications of model results on all stakeholders
~ Determine the solution to the problem
~ Consider alternative solutions
~ Formalize the solution

Question 6

List what to consider under monitor the experience (4)

Answer 6

~ Monitor regularly to reflect on current experience
~ Identify variance and reason for it
~ Identify trends
~ Feedback into other stages of the control cycle

Question 7

List what to consider under the general economic and commercial environment (7)

Answer 7

~ Understand the environment in which the product is being sold
~ Consider the impact decisions will have on the environment

Include:
- Economic outlook
- Customer needs and trends
- Marketing and competition
- Regulation
- Taxation

Question 8

List what to consider under professionalism (8)

Answer 8

~ Professional conduct standards
~ Technical and ethical standards
~ Views of all stakeholders
~ Act with integrity and detachment from the problem
~ Personal situation
~ Build a relationship with the client
~ Avoid conflicts of interest
~ Communication