Cat Risk and Operation Risk
Now that RBC includes both Cat Risk and the 1.03 Operation Risk adjustments in the calcs, are any response questions that use "does not account for Operation Risk or Cat Risk" no longer true?
Example: Compare differences in solvency reg calcs between RBC and SOlvency II? Would I just use interest rate risk now instead of all 3?
Comments
Yes, you would. We will make that revision in the wiki. Thank you.
okay thanks. These response answers occur throughout several sections, not just solvency II, just FYI, especially in examiner's reports. For example differences between rating agencies and RBC.
This change in the RBC formula to now include catastrophe risk and operational risk certainly does cause confusion when looking at examiner's reports for past exam problems where those were not part of the RBC formula. Rather than trying to alert the reader to all instances of where this occurs, I put note to that effect in the study tips section of the RBC article (see below.)
The best thing is to try to keep this in mind when you're looking at past problems. If you find any other instances in the wiki or BattleCards related to this issue, please let me know and I will fix it. I've gone through everything myself but it's very possible I've missed some of the places where this occurs.