Hi Everyone! I'm planning to sit for CP2 next session, and I'm a little confused about the automated and reasonableness checks (Sorry if this sounds obvious to some of you!!) Can anyone help me differentiate between these two checks? These checks carry lots of marks and I want to be able to grasp the concept well. If you can illustrate with a simple example, that's be great! Many thanks
Automated checks are where you can use Excel formulas to verify that your calculations are correct. If you're doing a sumif, for example, to summarise a total grouped by a field, you could check that the total you get is the same as the total of the original field. (Using Sept 2020 exam as an example, totalling the cost of guarantee split by year of issue / fund size / term to maturity, and checking that the totals after splitting are the same as before). A reasonableness check involves judgement - cost of guarantee is higher for policies in certain issue years than others - why? For years that are shortly after a significant drop, the cost is low, while for years shortly before a drop, it's high. Explain. The habit you should form is to think, before doing the calculation - what result am I expecting here? and Why? And then write that down when it happens as a check. To put it another way - automated checks show that you understand the mechanics of what you're doing. Reasonableness checks show you understand the implications of what you're doing. Hope that helps - because this is key. For borderline candidates, having some decent reasonableness checks is an important differentiator between pass & fail. And because so few candidates actually get any decent ones.
All of this makes sense. However, when you have errors in an exam paper it's a little harder to sit back and review your back of the envelope solution in next to no time. this is the key problem with this exam. hopefully it's not an exam with hugely life relatively insights on paper one like the previous exam created by the same person
