CAS Exam 6C Fall 2014, Question 26
Study guide: Exam 6C
The Appointed Actuary for a company has been asked by senior management to review the current stress testing program. Currently, the actuarial department is responsible for the stress testing program that is based on stochastic models which consider a static set of risks. The model assumptions are reviewed once a year.
Part a (0.5 points)
Define the term "reverse stress testing."
Part b (2 points)
Describe four ways to improve the stress testing program currently in place.
Part c (0.5 points)
Briefly describe two responsibilities of the Board of Directors with respect to the stress testing process.
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