Skip to content

IAI Actuarial Core Principles · Business Management · Decision-making process, attitude to risk and competition

After a Bengaluru insurer launched a new unit-linked product chosen through a formal decision process, sales fell well short of forecast after six months. Which action best represents the final stage of the decision-making process?

The final stage is review: comparing actual outcomes with expectations, finding the causes of the shortfall and feeding lessons into later decisions. Withdrawing without analysis or adjusting forecasts to fit results would not provide genuine learning or control.

  1. ARestating the original problem definition without change
  2. BComparing actual results with expectations, identifying causes and feeding lessons into future decisionsCorrect
  3. CGenerating fresh alternatives before checking performance data
  4. DWithdrawing the product immediately without analysis
  5. Increasing the sales forecast to match the actual sales

Explanation

The final stage is monitoring and review: compare outcomes with expectations, diagnose variances and learn. Immediate withdrawal skips analysis, and altering the forecast to fit results defeats the purpose of review.

Did you get it right without looking?

One question tells you little. A timed set on Decision-making process, attitude to risk and competition shows your real accuracy, how long you take and where you lose marks.

Practise Decision-making process, attitude to risk and competitionFree diagnostic mock

More Decision-making process, attitude to risk and competition questions