IAI Actuarial Core Principles · Business Management · Using data, company functions, people skills, influence and clear communication
Ritu, an actuary, presents a reserving result to the board. A director who dislikes uncertainty asks her to give a single figure without ranges. Ritu believes the range is material to the decision. What is the most appropriate response?
Ritu should give a clear best estimate and briefly explain the key uncertainty and range in plain language. This respects the audience's preference for simplicity while not misleading the board on a material point, which is what professional communication requires.
- AGive only the single best estimate, as the director asked, to avoid confusion
- BGive the best estimate, and concisely explain the main uncertainty and range in plain language so the board can decide with understandingCorrect
- CPresent a wide technical range with full model detail and no summary
- DGive the lower end of the range as the figure to appear confident
- Decline to present until the director withdraws the request
Explanation
Clear communication means tailoring the message to the audience while not misleading. A best estimate with a short, plain statement of uncertainty meets both needs. Omitting the range or choosing a favourable end risks misleading; overloading with detail or refusing fails communication.
Did you get it right without looking?
One question tells you little. A timed set on Using data, company functions, people skills, influence and clear communication shows your real accuracy, how long you take and where you lose marks.
More Using data, company functions, people skills, influence and clear communication questions
- Vikram, an actuary at a Delhi insurer, must persuade the finance director to fund a data-cleansing project. The director distrusts technical…
- A pension consultancy in Chennai has been asked by a client's trustees to explain the results of a mortality experience study. The trustees …
- A health insurer in Pune wants to show its board how claim costs have changed over the last 36 months and whether there is a seasonal patter…
- A mid-level actuary must present findings on policyholder persistency to the sales team of an Indian life insurer, who have no statistical t…
- Hind Suraksha Life, an Indian insurer, notices that its customer complaints about delayed claim settlements are rising. The claims team says…
- At Sanjeevani Pensions, the investment function wants to move assets into longer-dated, higher-yielding bonds. The risk function objects, ci…