Question

What is model risk associated with withdrawal risk?

a.

The risk of incorrect estimation of parameters used in the withdrawal model

b.

The risk of insufficient data for accurate withdrawal rate calculations

c.

The risk that the withdrawal model may not be appropriate or may yield inconsistent results

d.

The risk of random fluctuations affecting withdrawals

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).The risk that the withdrawal model may not be appropriate or may yield inconsistent results Explanation:Model risk associated with withdrawal risk refers to the risk that the withdrawal model may not be appropriate or may yield inconsistent results.

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Q. What is model risk associated with withdrawal risk?
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