Professional Documents
Culture Documents
FAMILY NAME:......
This question paper must be returned.
OTHER NAMES:.......
Candidates are not permitted to remove any
part of it from the examination room.
STUDENT NUMBER:.......
Candidates may not write or mark the exam materials in any way during reading time.
with another student once they have entered the final examination venue.
Candidates may only access authorised materials during this examination. A list of authorised material is available on this cover sheet.
If it is alleged you have breached these rules at any time during the examination, the matter may be reported to a University Discipline Committee
for determination.
EXAMINATION INSTRUCTIONS:
You have been supplied with seven (7) exam booklets. Label them Q1, Q2, Q3, Q4, Q5, Q6 and Q7
respectively, then answer each question in the corresponding separate booklet.
Write your name and student ID at the top of this question paper, as well as on each of your answer
booklets. Hand in this question paper, your one page of handwritten notes and your seven answer booklets
at the end of the exam.
This examination is being held in a number of locations internationally and it is inevitable that there
will be differences in timing of up to several hours. You are absolutely prohibited from doing
anything that may lead to other students gaining information about this exam paper before sitting
for the examination. Any breaches (either disclosing information or receiving information) will be
viewed as professional misconduct as well as an infringement of University rules and will be dealt
with accordingly.
Calculators: Non-programmable calculators that do not have text retrieval capacity permitted
Other: Closed book with specified materials permitted: 1 x A4 sheet of handwritten notes (double-
sided) collect with exam paper
Question 1 [13 marks]
Barramundi Financial (BF) is a diversified financial services group oper-
ating mainly in one country. BF has business units providing insurance,
banking, superannuation, funds management and financial planning services
to wholesale and retail customers.
BF has just been acquired by Kujira Financial (KF) which is a much
larger international group providing financial services in many countries. KF
is keen to expand the business of BF and has set BF management the fol-
lowing objectives.
These objectives will require some risks to be taken and KF can tolerate BF
making a loss once in every 5 years.
These objectives are much more aggressive than the objectives set by the
BF Board and management prior to the acquisition.
You are the Chief Risk Officer at BF and you are about to meet the Global
Chief Executive of KF for the first time. Prepare notes for your meeting on
the following topics.
a. [4 marks] The role of the Chief Risk Officer of BF and your strategy
for integrating ERM into the operations and culture of the business
units.
b. [3 marks] Three (3) major risks you see in achieving the new objectives
and how these might be managed.
c. [6 marks] The approach you propose for translating the new objectives
for BF as a whole into objectives for each business unit.
d. [3 marks] What are the main criteria you would suggest for selecting
the PI insurance proposal best suited to meet the needs of BE? Include
your thoughts about using an overseas insurance company rather than
a local one.
a. [5 marks] Outline the model you will use to determine the required
employer contribution rate.
b. [4 marks] What are the two (2) most important assumptions you will
need to make for the model you have outlined in a.? How will you set
those assumptions and how are the two assumptions interrelated?
c. [3 marks] Explain how you might use a stochastic model to help the
employer understand the risks of investment fluctuations.
c. [6 marks] Apart from raising more capital, what other strategies does
Mega Bank have to strengthen its regulatory capital position over the
next 12 months? What disadvantages do you see with each strategy?
d. [3 marks] How can Mega Bank make sure that it will continue to meet
the new capital requirements?
So you will need to review the pricing of your companys product. This is
an important issue for your company and the Chief Executive has asked for
a memo explaining your approach to each of the following aspects.
c. [8 marks] Your assessment of the four (4) main aspects of pricing you
will need to consider carefully resulting from the commission change
(other than the arithmetic result of changing the commission rates)
and the likely impact of each aspect.
b. [4 marks] Give two examples of how big data and data analytics can
be of use to the insurance industry. For each of your examples, explain
clearly how this paradigm offers an improvement over current practice.
c. [8 marks] You are a consulting actuary who has recently read the pa-
per SM bondsA New Product for Managing Longevity Risk. Human
mortality and longevity are key issues in that paper. The Australian
government, in its process of evaluating the costs and benefits of im-
plementing SM bonds, has asked you to prepare a detailed technical
report on how big data and data analytics could be used to predict
the number of deaths, by postcode, in Australia in 2016.
Write down the key points you will make in your report.
End of paper