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What to ask your actuary…

31 Dec 08

The past few months have brought dramatic changes in markets and increased uncertainty in the economy

|The past few months have brought dramatic changes in markets and increased uncertainty in the economy. To supplement the work of its operating bodies in setting technical actuarial standards and oversight of the actuarial profession, the Financial Reporting Council (FRC) has prepared a statement with a list of questions which may

be useful for governing bodies of:

 

• Pension schemes and sponsoring employers;

• Insurance companies and friendly societies; and

• Financial institutions and other entities that rely on actuarial work.

Paul Seymour, chair of the Board for Actuarial Standards, said:

“Although the headlines have not focused on actuarial work, the risks to confidence in corporate governance and reporting are higher than they have been for decades. These increased risks require additional diligence on the part of actuaries and the users of actuarial information and advice.”

The FRC’s questions are not exhaustive or intended to apply to every case or to substitute for specific regulatory guidance, but they are intended to stimulate discussion and improve understanding of relevant issues, such as:

• Business models;

• Risk reduction and transfer;

• Scenario analysis and stress testing;

• Investment assumptions and discount rates; and

• Scope of actuarial advice and pressures on actuaries.

Dame Barbara Mills, chair of the Professional Oversight Board, said:

“These questions are addressed to members of governing bodies, such as pension trustees and directors, but should also be of help to other professionals such as auditors, analysts, managers, and investors; and, of course, to actuaries themselves who need effective dialogue and scrutiny by users of their work to support their delivery of high quality advice.”

Copies of the statement are available from the FRC’s website.

Page No: 61

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