Chapter 0 - Conrol cycle

Question 1

What makes the actuarial control cycle ‘actuarial’?

Answer 1

• estimation of the financial impact of uncertain future events
• a long-term rather than the short-term horizon
• the recognition of stakeholders’ requirements and risk profiles
• decisions need to be made in the short term in light of likely future outcomes
• use of models to represent future financial outcomes
• use of assumptions based on appropriate historical experience
• need to allow for the general business environment (impact of legislation, regulation, taxation)
• interpretation of results of modeling to enable practical strategies to be developed
• monitoring and periodically analysing the emerging experience
• modifying models/strategies in the light of this analysis of the emerging experience
• application of professional judgment

Question 2

what is understood by the step of specifying the problem?

Answer 2

• identify and analyze the risks of various stakeholders in detail
• clearly set out the problem from the point of view of each stakeholder
• assessment of the risks faced and how they can be managed, mitigated or transferred