My verdict: an unusual and on balance not a very nice paper. This was my first sitting but I'd done all five previous papers under exam conditions as preparation and I thought that, with the exception of April 2012, this was the toughest. Having just six questions, and one 33 mark monster, in an ST subject is also pretty unusual I think. Whole swathes of the course made no appearance in the paper, and I found myself answering some questions relying more on common sense than on any knowledge of the subject.
I agree with the above. What is silly is that it would have been possible to answer a lot of questions on the exam without reading the notes or textbook..
The paper's now available on the Institute website. The second part of Q2, 10 marks on whistleblowing, was pretty unreasonable considering that this subject is barely touched on in the course notes. My answers there were not based on any particular ST9 knowledge. On Q3 v), I started trying to fit a gamma distribution to the aggregate operational loss for the three companies but abandoned it when my alpha parameter fell outside the range covered in the table at the back of the paper. I then used a normal approximation, which I thought would be a bad one but didn't see an alternative. What did others do there?
3 of them were in the ranges given in the table.. the 4th wasn't from memory.. you just had to do somthing resonable
I had a close look at Q2 (iii) and am inclined to agree with some of the comments in previous posts. It is probably unpractical to introduce a hotline that everyone can use for whistleblow, because even the company or industry "experts" may not be on top of the new regulatory. How can everyone else just ring up and say some rules are breached in the new regulatory? Interested to know how others approach this part.
My answers to Q2 iii) and iv) were based purely on common sense, as I couldn't recall anything in any ST9 material I'd read specifically on whistleblowing. In iii) I recall making points like: Call the hotline only if you've already tried to raise the matter you're calling about internally and got no satisfactory resolution. Be prepared to back up your allegations of a regulatory breach with evidence. Seeing as we were told that they had loads of petty and / or malicious calls, I thought they might warn callers that they could take action against those whose calls were deemed to be of this type after investigation. In iv), again my answer was just common sense: The regulator would contact the CRO / usual supervisory contact at the company and explain the allegations against them. The company would then have a suitable timeframe to respond to the allegations. After that, the regulator would either decide there was no case to answer or carry out further investigation, perhaps involving site visits. If they concluded that a regulatory breach had occurred, they might censure and / or fine the company if it was deemed serious enough. I showed this question to the Head of Risk at my company (not an actuary) and she thought it was pretty poorly worded! Frustrating that there were 10 marks for this when it barely got a mention in the course.
I also answered Q2 part (iii) with common sense, and some relevant Code of Conduct regarding whistleblowing duty. I can't recall all I put down, but I did mention initial discussion internally before contact the regulator too. However, after reading the question now, something worries me is that if you discuss with your company first before using the hotline, is anonymity still guaranteed? Or do you think the intention of the guidelines is just to filter out petty and/or malicious calls without necessarily guaranteeing anonymity? Arguably, the wording could have been clearer.
Q2 Whistleblowing Interesting discussion on Q2. Personally I thought this was a reasonable question - relevant to ST9 (even though barely discussed), real-life, requires students to think a little and apply their common-sense/wider business skills. The points made below all seem reasonable and would probably have gained credit in the exam.
It was a straightforward question according to me, i did the past 5 papers and it's not far from expectation to see a CA1 type of question. The whole paper was surprisingly doable. The only unsettling thing was the diversification benefit, i tried to sum the means and variances for the three companies in part 3 (v) (b), they were looking for the correlation matrix and they were right since the aggregate Gamma distribution assumption was unfounded.
