IAI Actuarial Core Principles · Business Management · Communicating strategy; culture and structure in decision making; strategy case studies
Priya, an actuary employed by an Indian insurer, is asked by the CEO to present a strategy case for a new savings product. Her analysis shows the product would be profitable only under optimistic lapse assumptions, and the CEO asks her to present only those assumptions to the board so the launch is approved. Which course is most consistent with the Actuaries' Code and professional duties?
Priya should present the analysis honestly, disclosing that profitability depends on optimistic lapse assumptions, and escalate if pressure continues. The Actuaries' Code requires integrity and communication that is not misleading, so employer instructions cannot justify omitting material limitations from the board.
- APresent only optimistic assumptions, since the employer's instructions override professional duties
- BPresent the optimistic case but omit her reservations to avoid conflict
- CResign immediately without informing anyone
- DPresent the work honestly, including the sensitivity to lapse assumptions, and escalate her concerns if pressure continuesCorrect
- Delay the work indefinitely without telling the board
Explanation
The Code requires integrity, honesty and communication that is clear and not misleading. Showing only favourable assumptions would mislead the board. She should disclose the sensitivity and escalate if pressured. Silent omission and silent delay both fail the duty to communicate properly.
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