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April 2016 #2 (viii)

J

Janet Wesner

Member
The question asking for the most appropriate modeling technique for assessing capital needed for flood event has Extreme Value Theory as the published answer "since the likelihood of a flood event happening is very low". This does not make sense to me on many levels. The question states that flood events are unlikely, not just big flood events are unlikely. Likelihood is "very low" is subjective but seems that a candidate could reasonably interpret that as low enough so that too big of a block size would be needed to have relevant past data for fitting a GEV. Since this is my first UK exam, wondering what the appeals process is for UK exams. The published solution suggests that other answers were not accepted.
 
The appeals process can be found on the IFoA website. However, it seems unlikely that such a fine point would be the difference between pass and failure. ST9 examiners generally do give credit for making relevant points that answer the question.
 
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