The refrain "All models are wrong but some are useful" is a common aphorism in the actuarial field. Certainly, models are at the core of what actuaries do. Irrespective of whether actuaries are involved in the pricing, valuation, risk management or hedging functions, our work means building, using, modifying or reviewing models in some fashion.
In recent years there has been strong insurance industry focus on model validation and governance frameworks, typically at the direction of senior management and regulators. When properly carried out, such a framework can help increase stakeholder confidence in the company financials. Such stakeholders include senior management and other end-users. Presenters at this session will discuss the approaches used in the industry to construct this framework, discussing best practices for concepts such as baselining, model inventory, model validation, effective challenge and user acceptance testing for the actuarial and non-actuarial functions.
At the conclusion of the session, attendees will be able to:
· Construct a model validation framework;
· Implement best practices; and
· Execute a successful validation.
Experience Level: Intermediate
Country Relevance: Non-Nation Specific