Chapter 13-15: Risk Flashcards
1
Q
Number of model points used depends on (2)
A
- Purpose
- Computing power available
2
Q
Data sources (5)
A
- Industry data
- National statistics
- Reinsurers data
- Overseas data
- Internal experience data
3
Q
Risks (
A
- Data
- Mortality
- Investment performance
- Expenses
- Withdrawals
- New business volumes/mix
- Guarantees and Options
- Competition
- Actions of board of directors
- Actions of distributors (distribution channels)
- Failure of management control systems
- Counterparties
- Legal/fiscal developments
- Fraud
- Insolvency
4
Q
3 Factors of mortality risk
A
- Parameter risk
- Model risk
- Random fluctuations risk
5
Q
Expense risk
A
Risk that actual expenses higher than expected or allowed for due to (but not restricted to) the effects of infl.
6
Q
Why board members do not necessarily follow actuaries’ recommendation? (3)
A
- Competitive reasons
- Strategic company goals
- Maximise SH earnings
7
Q
What 3 actions of distributors are a risk?
A
- Encouraging business to lapse and re-enter
- Taking advantage of loopholes in prod design
- Taking advantage of opps that arise due to timing effects in unit pricing practices
8
Q
Fraud and 3 main parties perpetrating
A
General type of control failure caused by deliberate intent of one or more parties. Main parties who may perpetrate:
• Directors or staff
• PHs
• Other outside parties
9
Q
Risk aggregation can be done by (3)
A
- Correlation matrices
- Summing risk components
- Copulas
10
Q
2 Aims of an insurer
A
- Maximise profit
- Maximise return on capital
11
Q
Credit rating
A
External assessment of aggregation of risk of a life insurer
