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

An actuary at a Mumbai general insurer is asked to recommend whether to launch a new motor add-on cover. She identifies three options and scores each against agreed criteria: profitability, solvency impact and customer appeal, weighting each criterion. Which stage of the decision-making process is she mainly performing?

She is evaluating alternatives against criteria. Scoring each option on weighted measures such as profitability, solvency impact and customer appeal is the evaluation step, which follows identification of options and precedes selection, implementation and review.

  1. AProblem identification
  2. BEvaluation of alternatives against criteriaCorrect
  3. CPost-implementation review
  4. DMonitoring of risk appetite
  5. Delegation of authority

Explanation

Scoring options against weighted criteria is the evaluation stage. The problem and options have already been identified, and nothing has been implemented, so review is not yet relevant.

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