Preview Questions Actuary | Role Specific Skill

Question 1: Which modeling technique is commonly used to assess operational risk in an insurance company?

Which action should you take?

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Loss Distribution Approach (LDA)

Linear regression

Poisson regression

Exponential smoothing

Question 2: What is the main disadvantage of using deterministic forecasting in actuarial models for long-tail insurance products?

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It requires excessive computational resources

It fails to capture the inherent uncertainty in claims development

It does not incorporate asset return forecasts

It overestimates the potential returns from risk-free investments

Question 3: Which regulatory framework requires banks to hold capital reserves based on the risk-weighted assets?

Which action should you take?

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Solvency II

IFRS 9

Sarbanes-Oxley Act

Basel III

Question 4: What is the role of "Sensitivity Testing" in pension plan modeling, and how do you use it to assess the robustness of pension plan assumptions?

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Sensitivity testing complicates models without improving the accuracy

Sensitivity testing is irrelevant in pension plan modeling and should be avoided

Sensitivity testing involves changing key assumptions (e.g., mortality rates, discount rates) to assess their impact on pension liabilities, ensuring the model's robustness

Sensitivity testing only applies to stock market models, not pension plans

Question 5: If the data shows a kurtosis value significantly greater than 3, what does this indicate?

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The data has heavy tails and a higher probability of extreme outcomes

The data is evenly spread around the mean

The data is normally distributed

The data has a uniform distribution

Question 6: Which of the following is the most common risk model used in asset-liability management (ALM) for insurance companies?

Which action should you take?

Choose only one option

Asset Duration Matching

Black-Scholes Model

Monte Carlo Simulation

Credit Risk-Adjusted Return Model