F_Useful Mnemonics 3

Question 1

offer : Factors to consider when analysing mitigation options in capital appraisal

Answer 1

overall impact on distribution f npvs
feasibility and cost
further mitigation to respond to secondary risks
effect on frequency, severity and correlation
resulting secondary risks

Question 2

safer : Reasons for underwriting

Answer 2

substandard lives are identified and offered special terms
avoid anti-selection
financial underwriting is done to reduce the risk of over insurance on large policies
experience does not depart too much from that assumed in the pricing basis
risk classification ensures that all risks are treated fairly

Question 3

murda : Risk management tools

Answer 3

management control systems
underwriting and claims control systems
reinsurance 
diversification 
ART

Question 4

dipsis : ART products

Answer 4

discounted covers
integrated risk covers
post loss funding
securitisation 
insurance derivatives
swaps

Question 5

crises : Options to consider when comparing discontinuance options

Answer 5

choice 
risk 
investments 
security 
expenses 
surplus

Question 6

card : Common aims of accounting standards

Answer 6

consistency in the accounting treatment from year to year
avoid distortions resulting from the contribution fluctuations
realistic recognise the realistic costs of accruing benefits
disclosure of appropriate information

Question 7

disclosure : Information to be disclosed in benefit scheme

Answer 7

directors pension costs are disclosed
investment strategy and performance
surplus and deficit arising in last year and accrued to date
calculation methods and assumptions
liabilities accruing over the year and accrued to date
options and guarantees
sponsors and member contribution obligations
uncertainties risks and uncertainties
rights on wind up
expenses

Question 8

crimes : Inappropriate advice

Answer 8

complex or complicated products
rubbish incompetent advisor
integrity the advisor lacks integrity driven by sales related remuneration
model and parameter errors
errors data relating to memebers is incorrect
state state encouraged but inappropriate actions

Question 9

cossacs : Benefits of good risk management

Answer 9

confidence given to stakeholders
opportunities identified and can be taken advantage of
stability and quality of business improved - we avoid bad risks and business is better for it
synergy opportunities
arbitrage opportunities
capital better allocated
surprises avoid surprises

Question 10

trainers : Sources of data

Answer 10

tables e.g. actuarial mortality tables
reinsurers 
abroad data from overseas contracts
industry data
national statistics
experience experience investigations on the existing contract
regulatory regulatory reports and company accounts
similar contracts