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IAI Actuarial Core Principles · Business Management · Using data, company functions, people skills, influence and clear communication

An actuary prepares a report for a pension fund's trustees recommending a higher contribution rate. Afterwards a trustee misreads the report as saying the fund is insolvent. Which earlier step would most directly have reduced this risk?

Having a colleague unfamiliar with the work review the draft would best reduce the risk. A fresh reader shows whether the wording conveys the intended meaning, whereas more equations, abbreviations or removing the purpose would make misinterpretation more likely.

  1. ATesting the draft with a colleague unfamiliar with the work to check the wording is understood as intendedCorrect
  2. BAdding more equations to the main body
  3. CShortening the report by removing the stated purpose
  4. DReplacing prose with a single table of ratios without commentary
  5. Using more abbreviations to reduce length

Explanation

Peer review by a reader outside the work reveals ambiguity and misreadings before issue. More equations, abbreviations or removing context generally make misunderstanding more likely.

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