Actuarial Glossary - Actuarial Notes Wiki

[[Actuarial Notes Wiki|Wiki]] / ==Actuarial Glossary== > The **Actuarial Glossary** defines ==actuarial terms based on standards and regulation.== ## Fundamental Terms | Term | Definition | | ------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | [[Risk]] | "Possibility of failing to meet objectives." or "Can only be defined in context." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) "Effect of uncertainty on objectives." (ISO, 2018) | | Risk Management | "Coordinated activities to direct and control an organization with regard to risk." (ISO, 2018) | | Actuarial Risk | "A phenomenon subject to uncertainty with respect to one or more of the variables: occurrence, timing, and severity." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | | Financial Risk | "Financial impact from financial transactions." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) "The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, currency exchange rate, index of prices or rates, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract." ([IFRS 17](https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ifrs-17-insurance-contracts.pdf?bypass=on)) | | Insurance Risk | "Risk, other than financial risk, transferred from the holder of a contract to the issuer" ([IFRS 17](https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ifrs-17-insurance-contracts.pdf?bypass=on)) | ### Chance and Uncertainty | Term | Definition | | ---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | Uncertainty | "A situation which involves imperfect or unknown information." Including predictions of future events, physical measurements or the unknown." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) "Unmeasurable risk." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | | Event | "The result of an experiment is called an outcome; an event is a set of one or more possible outcomes." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) "Occurrence or change of a particular set of circumstances." (ISO, 2018) "A specified change of the states of the world/affairs" (SRA) | | Probability | "A measure that takes on values from zero to one and gives the likelihood of occurrence of an event." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | | Likelihood | "Chance of something happening." (ISO) | | Severity (Distribution) | "The probability distribution for the amount of loss." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | ### Insurance | Term | Definition | | ------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | Insurance Contract | "A contract under which one party (the issuer) accepts significant **insurance risk** from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder." ([IFRS 17](https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ifrs-17-insurance-contracts.pdf?bypass=on)) | | Life Insurance | | | Casualty Insurance | "A broad category of non-life, non-health coverage against loss of property, damage or other liabilities, including such things as vehicle insurance, liability insurance, theft insurance, machinery, and crime." | | Reinsurance | "A transaction between a primary insurer and another licensed (re)insurer where the reinsurer agrees to cover all or part of the losses and/or loss adjustment expenses of the primary insurer, for a premium. Indemnification could be on a proportional or non-proportional basis." | | Underwrite | "The process by which an insurance company decides which people to accept for insurance and on what terms." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | | Exposure | "A measure that reflects how many persons or contracts were exposed to the possibility or risk of the event under study, and for how long." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | | Earned Premium | "Earned premium is the portion of an insurance premium that paid for a portion of time in which the insurance policy was in effect, but has now passed and expired. Since the insurance company covered the risk during that time, it can now consider the associated premium payments it took from the insured as 'earned'" ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | | Claim | "A document or request filed by a policyholder, beneficiary or other stakeholder stating that an insured event has occurred and that the insurance company should provide coverage." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | | Reserves | "Liability set aside to pay future claims" ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | | Incurred But Not Reported | "Amount owed by an insurer to all valid claimants who have had a covered loss but have not yet reported it. Since the insurer knows neither how many of these losses have occurred, nor the severity of each loss, IBNR is necessarily an estimate. The sum of IBNR losses plus reported losses yields an estimate of the total eventual liabilities the insurer will cover, known as ultimate losses." ([SOA](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf), 2022) | ### Claims Modelling | Term | Definition | | -------------------- | ---------- | | Frequency | | | Severity | | | Mortality | | | Development | | | Differential | | | Discount / Surcharge | | | Simulation | | ### Machine Learning | Term | Definition | | ---------------- | ---------- | | Regression | | | Linear Model | | | Non-Linear Model | | | Parameter | | | Machine Learning | | | Predictive Model | | | Clustering Model | | | Tuning | | | Optimize | | ### Domains | Domains | Definition | | -------------------------------------- | ---------- | | Enterprise Risk Management (ERM) | | | Integrated Risk Management (IRM) | | | Governance, Risk, and Compliance (GRC) | | | Information Security (InfoSec) | | ## Software | Software | Definition | | ---------------------------------------------- | ---------- | | Information Security Management Systems (ISMS) | | | Risk Management Information System (RMIS) | | ### Standards | Standards | Definition | | --------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | ISO 27001 | Requirements for Information Security Management Systems (ISMS) developed by the International Standards Organization (ISO) and International Electrotechnical Commission (IEC) | | ISO 31000 | Risk Management guidelines developed by the International Standards Organization (ISO) | | COSO ERM | Enterprise Risk Management (ERM) guidelines from the Committee of Sponsoring Organizations of the Treadway Commission (COSO) | | SOC 2 | A data security framework developed by the American Institute of Certified Public Accountants (AICPA) | | NIST RMF | NIST Risk Management Framework for Cyber Security | ## Sources **Actuarial Standards** - [Society of Actuaries Glossary (SOA)](https://www.soa.org/4a537f/globalassets/assets/files/edu/actuarial-glossary.pdf) - [[Actuarial Standards of Practice (ASOPs)]] - [[International Standards of Actuarial Practice (ISAPs)]] **Risk Management Standards** - [[Society for Risk Analysis Glossary (SRA)|Society for Risk Analysis Glossary]] - [[ISO 31000 - Risk Management - Guidelines|ISO's 31000 Risk Management Guidelines]] - [[ISO-IEC 31010 - Risk Management Techniques]] **Insurance** - [Glossary of Insurance Terms](https://content.naic.org/glossary-insurance-terms) (NAIC) - [IFRS Accounting Standards](https://www.ifrs.org/issued-standards/list-of-standards/) (IASB) - [[GAAP Accounting Standards]] (GAAP) - [policyterms.ca](https://policyterms.ca/)