IAI Actuarial Core Principles · Business Management · Communicating strategy; culture and structure in decision making; strategy case studies

Meera, a Fellow of the IAI, advises Deccan Life on a case where the firm's growth strategy relies on a new savings product. Her modelling shows the guarantee could be costly under falling interest rates, but the CEO asks her to present only the favourable scenarios to the board so the launch is approved. Which course of action is most consistent with the Actuaries' Code and sound strategic practice?

Meera should present both favourable and adverse scenarios with their limitations so the board can decide with full information. The Actuaries' Code requires communication that is not misleading, so selective presentation is improper, while leaking or silent resignation would be disproportionate and unprofessional.

APresent only favourable scenarios, since the CEO is her employer
BPresent the favourable and adverse scenarios with clear limitations, so the board can make an informed decisionCorrect
CResign immediately without informing anyone
DLeak the adverse results to the press to protect policyholders
Omit the adverse scenarios but mention them verbally if asked

Explanation

The Code requires communication that is clear, complete enough for the audience's decision and not misleading. Showing only favourable scenarios would mislead the board. Resigning silently or leaking to the press are disproportionate and breach confidentiality, and omitting adverse results unless asked is still misleading.

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