IFRS-17 Sample question 4

SebastienNSebastienN
in CIA.IFRS17-2

By defn, the risk adjustment adjusts the discounted future cashflows to reflect the compensation the entity requires for bearing uncertainty in amount & timing of payments.

Question 1: In this question if I only stated that the risk adjustment adjusts the discounted future cashflows for non-financial risk would this be valid answer?

Question 2: From what I understand the risk adjustment increases total liability and should be a cash outflow. However by the phrasing of the answer provided in this question it seems that the risk adjustment is a compensation/gain and thus an inflow rather than an additional liability/outflow? Could you help me clarify this?

Comments

  • Staff-T1Staff-T1

    Question1 : Yeah that's fine

    Question 2: The risk adjustment is always an outflow as it is meant to protect against adverse deviation in loss experience. There is no ambiguity in the way it is applied and how it increases the liabilities

Sign In or Register to comment.