ORSA & ERM

Which statement is correct?

• Stress test scenario is mostly focused on the high probability event

• Sensitivity analysis usually conducts on multiple assumption at the same time

• Executive mostly utilize the scenario analysis to see the financial outcome if the scenario become true

• Reverse stress test is the worst business scenario which was happened for last 5Y

Which one is incorrect ?

• Based on the own risk assessment, operational risk can be quantified easily such as 1% of gross written premium

• Volatility of market value is major concern for the market risk

• Liquidity risk is not significant for unit link policy

• Asset Liability management is very important for life insurance company to assess the interest rate risk

Which one is not true of risk management ?

• Risk management can enhance the likelihood to achieve the company strategy

• Board of director must be responsible to Enterprise risk management framework such as approve risk management policy

• Risk, business strategy and capital must be linked in order to gain the benefit of risk management framework

• ORSA is mainly focused on the qualitative assessment because quantitative assessment will cost burden to insurance company especially small size

Which one is the most correct regarding to 3-line of defense ?

• Underwriting function is not responsible for risk control at all because it works on the first line or risk-taking Business Unit

• Actuarial function can be positioned as first and second line such as pricing actuary will work as 1^st line, while corporate actuary will work as 2^nd line

• Compliant and internal audit are interchangeable areas which all of them working on 3^rd line

• Investment team will work as 2^nd line because their main function is needed to management and monitor financial risk

Per Thai RBC regime, a company have TCA = 200 million and TCR = 100 million which statement is appropriate if asset effective duration = 8.3 year and liability effective duration = 12.5 year ?

• Company CAR = 50% and when interest rate goes up CAR ratio would likely higher than 50% because lower TCA is dominated

• Company CAR = 200% and when interest rate goes up CAR ratio would likely lower than 200% because lower TCA is dominated

• Company CAR = 200% and when interest rate goes up CAR ratio would likely higher than 200% because lower TCR is dominated

• Company CAR = 50% and when interest rate goes up CAR ratio would likely lower than 50% because lower TCR is dominated