Fall 2018 #22 c)
When reading the question, I wasn't sure what they meant by "focus". It seems like a large definition when looking at the possible answers.
If I select the Government Risks, do you think it would have been a valid choice? My reasoning was that it may be possiible that the goverment decide to enact new laws forcing the isurers to take all comers for insurance flood, with a capped premium, whle giving them the option to ceded to a pool similar to Flood Re in UK.
Comments
But why would that be an area of focus? This not really a risk per say as they still have the option to cede risks to a pool. I think this question could accept a wide variety of answers so it varies on a person by person basis, but I would not accept this answer. Maybe if you had said risk of government capping premiums and forcing insurers to fully subsidize risks with no avenue for recourse, it may be something I would accept
For this question, we need to provide a "focus" and not a "consideration", so why is Multiple perspective and Infrastructure one of the sample answers? Aren't those part of RUDI?
I kind of view focus and consideration as the same thing
But the examiner's report for this question says:
"Common errors included:
• Outlining considerations of stress testing program design but not focuses. For example, documentation and data quality are not considered focuses."
Documentation and data quality are part of RUDI (if we view data quality as being whether the data is up to date), so there must be a difference between consideration and focus.
Any thought?
You are right, but I think certain aspects of RUDI could be considered focuses depending on how it is phrased. It really depends on the examiner. I think what they were looking for is from page 8 of the stress testing paper. Intuitively it would make sense to have multiple perspectives and infrastructure as focuses but not data quality and documentation. That said, I agree there is some inconsistency here