ACTUARIAL SCIENCE PROJECT TOPICS AND MATERIALS

This study examines the factors that influence the techniques of credit risk modeling for life insurers in Nigeria - a major developing economy of sub-Sahara Africa. Credit risk is the risk of default on a debt that may arise from a borrower failing to make required payments.In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased collection costs. The loss may be complete or partial and can arise in a number of circumstances .

The business of risk adjustment has come a long way since the publication of the Academy's Monograph Number One with the title, Health Risk Assessment and Health Risk Adjustment Crucial Elements in Effective Health Care Reformance in May 1993. Less than ten years later, we had hospital inpatient diagnosis-based approaches, such as the model used by the Market Stabilization Pool for small group and individual coverage in NYS in conjunction with mandated community rating. The PIP-DCG approach for Medicare + Choice, also inpatient only, soon followed.

Market risk is the risk that the value of an investment will decrease due to moves in market factors. It can also be said to be the risk to an institution resulting from movements in market prices, in particular, changes in interest rates, foreign exchange rates, and equity and commodity prices. Market risk is often propagated by other forms of financial risk such as credit and market-liquidity risks. Market risk is the risk of loss in the value of a financial institution's proprietary trading holdings in equity, debt, FX or commodity instruments, due to fluctuations in market prices.

To the insurance industry, cash flows can be generated through underwriting activities, financing and investing choices, and even managing risks; consequently modeling cash-flow risks will be on a dynamic basis process because it is essential to forecasting and managing financial and underwriting risks. To model the cash-flow risks specific to the insurance industry, we have to capture the dynamics of the cash-flow–generating process of an insurer. The cash-flow–generating process can be characterized by two major components: (1) the earnings that result from core activities and cannot be modified and (2) other profits that can be modified through the dimensions of investment choices, risk management, and financial policies. In addition, the factors underlying the cash-flow–generating process may be intertwined and thus under the generating process can present the risks to the extent of cash-flow level.