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Commercial Actuarial Practice Course 10   Top 

   

Course Description

Pre-Course Work
Learning Objectives

Assessment Piece Two
Part A:
Application of Actuarial Skills in a Business Environment

Part B:
Communication in Written Form: Communicate, in written form, the solution/s to a range of audiences.
Part C:
Application of Ethical, Corporate Governance and Professional Standards
Course Logistics

 

 

Course Description

 

‘Commercial Actuarial Practice’ was first offered to Part III students in Semster 2, 2005.  The course is compulsory for all new Part III students.

The overall objectives of this course are to provide students with the skills and knowledge to be able to:

Ø      apply actuarial skills across a range of traditional practice areas and in unfamiliar (i.e. non-traditional) areas by contextualising actuarial solutions or approaches in the wider commercial environment of the business as a whole

Ø     apply ethical concepts, corporate governance requirements and actuarial professional standards when contextualising actuarial solutions or approaches.

Ø       successfully communicate the actuarial solutions or approaches to a range of audiences.


It consists of:

ü       pre-reading materials

ü      a four-day course (the nature of the program is such that residence is not mandatory but highly recommended)

ü      two assessments: Post course report, which is due two weeks after the residential course and Case Study Exam dur on Friday 23 October. 


The nature of the course requires a different approach to teaching from that currently in place for other Part III subjects. The learning objectives and the emphasis on judgement in commercial situations warrant a learning environment where discussion can take place, rather than reliance on self study methods alone. The course will therefore comprise written material but will also include a five day residential course that allows students to examine case studies in detail.

This approach will allow students to use judgement in applying the knowledge and skills they have gained in the first three Part III course modules to simulated commercial problems. Cases studies in both traditional practice and non-traditional practice areas will be covered during the course. Students will be provided with reading material in advance of the course.

For 2010, the traditional practice areas to be covered will be:

a)     General Insurance

b)     Life insurance, including funds management

c)     Superannuation and Planned Savings

d)     Investment and finance

e)   Enterprise Risk Management;


and the non-traditional applications will be chosen from:

a)     Banking

b)     Health financing

c)     Environment

 

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Pre-Course Work

 

In the period between receipt of the materials and the commencement of the residential course students are expected to complete the following:

 

ü     attend, or listen to, the orientation session 

ü    read the background notes and at least the core reading relevant to each case in a non-traditional area

ü     read the Professional Behaviour & Corporate Governance notes

ü     read the communications material 

ü      decide whether they will do the General Insurance or the Life Insurance case or the GRIS

ü       for each case study (only one of Life or GI), work out what your answer would be. This does not mean that you prepare a full report for each case, but you should do the following:

 

o       digest the material

o        complete all the quantitative analyses required for the solution

o        commence the preparation of an answer by considering the major issues raised in the case and assemble the key elements of their answer

o      prepare two to five pages of notes, for each of the other seven cases, for submission on day 1 of the residential course


The orientation session for Semester 1 2010 will be held on Wednesdaty 20 January from 5:00 – 7:00 pm at the Institute’s office in Sydney. Facilities will be available for students in other locations to take part in this session and details will be communicated separately. The session will give an overview of the CAP course and provide students with an opportunity to raise questions at the beginning of the semester before they get too far in their pre-course work.

Any queries regarding the logistics of the Course should be forwarded to carmen.joseph@actuaries.asn.au

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Learning Objectives

1)     Apply actuarial skills across a range of traditional practice areas and in unfamiliar (i.e. non-traditional) areas by contextualising actuarial solutions in the wider commercial environment of the business as a whole, and applying the actuarial control cycle

2)     Understand the overall aspects of the business which impact on the formulation of actuarial methodology and be able to incorporate those aspects into the approach and/or solutions. Specific aspects of the business include:

 

Ø  Availability and optimum use of capital

Ø  Asset / liability matching management

Ø  Impact of strategic objectives on shorter term decisions

Ø  Profit optimisation of price / volume

Ø  Holistic risk management

 

3)     Measure and communicate the risks attending alternative solutions

4)     Recognise the cost of additional levels of detail in actuarial solutions and their relative value.

5)     Apply sound investment practice to asset / liability matching

6)     Communicate, in written form, the actuarial solutions to a range of audiences:

 

Ø  simplify complex ideas

Ø  pitch ideas at the audience

Ø  focus on the key facts, issues and risks rather than explain all the details

 

7)     Apply general ethical concepts, corporate governance requirements and actuarial professional standards when contextualising actuarial solutions.


 


 

Part A: Application of Actuarial Skills in a Business Environment

 

The syllabus will cover both traditional and non-traditional practice areas.  Students will be required to demonstrate the ability to apply actuarial skills and judgement in one traditional and two non-traditional practice areas by contextualising actuarial solutions in the wider commercial environment of the business as a whole, and by applying the actuarial control cycle. Practice areas are referred to as a business even though in some cases eg. superannuation, ageing populations, there may not be a profit making enterprise as the entity being advised, or a major component of any solution may be government action.

In traditional practice areas, it is assumed that students have a level of understanding and competence in their chosen traditional practice area which is at the level required for a pass in both Modules 2 and 3 in that practice area. 

The understanding and competence required for each non-traditional practice area is at the general level but with sufficient clarity to contextualise the actuarial solutions at a high level, rather than at the detailed level required of traditional practice areas.  That is, it is not expected that students would be able to pass equivalent Modules 2 or 3 in the non-traditional practice areas, were they to be offered.

Given the above distinction between traditional and non-traditional practice areas, the depth required in respect of some of the Aims below will vary depending on whether a traditional or non-traditional practice area is being considered.

Aim A1
Understand the overall environment in which the business operates

a)     Understand the legislative context in which the business operates and the essential features of the relevant legislation 

b)     Describe the societal context and expectations of the business

c)     Describe the key political constraints which impact on the operation of the business


Aim A2
Understand the key drivers of the business and the underlying business models which apply

a)     Describe the key drivers of financial outcomes in the business

b)     Analyse the broad economic and financial relationships in each of these drivers

c)     Understand the various business models used by participants in the appropriate market places

d)     Analyse those models and determine their strengths and weaknesses


Aim A3
Recognise and analyse the major risks faced by the business from an holistic perspective

a)     Identify the risks faced by the business as a whole

b)     Identify any risk contagion applying to the business as a whole from the interaction of specific risks across other parts of the business

c)     Measure the potential impact of those risks including probability of occurrence and likely financial impact

d)     Understand the possible risk management practices that could be used by the business

 

e)     Analyse those practices and identify their strengths and weaknesses

f)      Recommend new practices and procedures to improve the risk management in the business


Aim A4
Price traditional products so as to optimise the price / volume / capital matrix

a)     Understand the impact of the business strategy on the pricing paradigm

b)     Price products so as to optimise the price / volume trade-off, where one exists

c)     Understand the importance of capital availability and related risks on sales volume and other business objectives

d)     Price products for the business as a whole recognising the requirement for adequate return on capital


Aim A5
Prepare medium term financial projections

a)     Create appropriate actuarial models to facilitate the preparation of medium term financial projections reflecting the essential business activities

b)     Analyse the material areas of experience for each of the key business drivers

c)     Develop an appropriate assumption set for the medium term including alternative scenarios

d)     Develop a stochastic approach to highlight the risks in these projections

e)     Prepare those medium term projections, including alternative scenarios, with particular attention to the uncertainties involved, including issues related to the capital required for the business

f)     Develop and use processes and key indicators to review future outcomes

g)     Understand the impact of longer term strategic objectives which impact on shorter term objectives

h)      Measure and communicate the risks involved in any departure from true matching between assets and liabilities

i)      Using the above outcomes, develop a proposed solution/s


Aim A6
Measure the risks involved in alternative solutions

a)     Identify the risks involved in alternative solutions

b)     Measure these risks in terms of probability of occurrence and potential financial impact

c)     Communicate these risks in a manner such that their full impact is understood by management


Aim A7
Understand the concept of materiality

a)     Understand the various definitions of materiality

b)     Develop the approaches or solutions with regard to appropriate materiality: costs, benefits, time

c)     Understand the risks involved in various approximations involved when using different measures of materiality

Aim A8
Contextualise the proposed actuarial solution/s

a)     Place the proposed solution/s in the overall business context

b)     Apply the legislative, societal and political constraints which are relevant to the business to the proposed solution/s

c)     Communicate the proposed solution/s to the business stakeholders in a manner designed to ensure their understanding

d)     Describe and communicate the risks involved in those proposed solutions and in any alternative approaches

 

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Part B Communication in Written Form: Communicate, in written form, the solution/s to a range of audiences.


Aim B1
Understand the different needs of various audiences

a)     Describe the different needs of various audiences in respect to the communication of solution/s

b)     Determine the necessary differences to the written communications required to satisfy the needs of those various audiences


Aim B2
Understand the requirements for written actuarial communications

a)     Apply the requirements of the code of conduct and any relevant legislation to the communications

Aim B3
Prepare actuarial reports

a)     Produce actuarial reports consistent with Aims B1 and B2


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Part C Application of Ethical, Corporate Governance and Professional Standards

 

Aim C1
Understand general ethical business requirements

a)     Describe the generally accepted standards for ethical business behaviour

b)     Understand current societal attitudes towards business, their apparent behaviour standards and the potential diversity in these attitudes across different cultures

c)     Understand the responses emerging to the societal and political pressures on business to change its apparent behaviour standards


Aim C2
Understand the emerging standards of corporate governance

a)     Understand the broad direction of legislation applying to corporate governance

b)     Understand the other forces impacting on general corporate governance standards

c)     Describe the actuarial professions emerging standards relating to corporate governance


Aim C3
Apply ethical, corporate governance and professional standards to the contextualisation of solutions

a)     Apply the requirements of professional standards in framing and communicating the solution/s

b)     Apply the general ethical and corporate governance standards when contextualising the solution/s within the business as a whole

c)     Apply corporate governance standards as developed by the actuarial profession in the formulation and communication of the solution/s.

 

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Course Logistics


The course will be conducted at the Macquarie Graduate School of Management, 99 Talavera Road, North Ryde, NSW 2113. Accommodation is at the Travelodge Macquarie North Ryde, 81 Talavera Road, North Ryde, NSW 2113.

 

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