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+1 vote
in BUS 4027W - Actuarial Risk Management by (1.2k points)


In ARM tutorial 13 question 2, it states: 

"A medium-sized life insurer, Happy Life, has been using external managers for all its investment needs.

They are about to launch their first in-house investment fund: an actively managed equity fund.

Happy Life has hired 10 analysts to do fundamental analysis and 3 admin people. Fund fees are 1% p.a., with no initial fee. The fund will be available to existing Happy Life investment policies and new policies.

Happy Life hopes to place this fund on other existing investment platforms in the future.

Identify the key risks of and apply the risk management control cycle to this new venture. "

My question relates to what this question means when they say apply the risk management control cycle. What do we need to consider? do we just take the risks identified and then talk them through the cycle? I am a bit lost, thanks

1 Answer

+2 votes
by (320 points)


The approach you suggested above is basically what you have to do.

The question is asking you to identify KEY risks associated with this new venture. Be careful of the word KEY here, it requires you to only think about major risks here. Make sure that you considered risks from different perspectives when answering. This is essentially the first step of the risk control cycle. 

Then for each risk you identified, you need to apply the rest of the risk management control cycle to it. This involves:
1. Risk analysis: This might involve the consideration likelihood of this risk happening and its impact etc.
2. Apply risk control: typically consider any risk mitigation tools.
3. Consider finance related issues with the risk identified
4. Review and monitor experience on a regular basis.

The length of your answer should depend on the mark allocation, which also gives an indication of how detail you need to talk about for each risk.