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By MJ the Fellow Actuary

What you will learn

We will discuss what a model is and why actuaries make them. We will look at their components and discuss their limitations. We will also compare the stochastic model to the deterministic model and determine how to choose between them. We will also consider stress testing, scenario analysis and sensitivity testing before looking at Time Horizons and communication.


This is a theoretical course for the Actuarial Exams.

The course answers the following questions

  • What is a model and why do Actuaries make them?
  • What are the components of a model?
  • What are the limitations of models?
  • Deterministic vs Stochastic: Whats the difference?
  • What is the Time Horizon?
  • What is Stress Testing?
  • What is Scenario Analysis?
  • What is Sensitivity Testing?
  • How do we communicate a Model’s results?

Actuarial Exams:

  • Almost all actuarial subjects involve models and so this subject is appropriate for them all.





Course Outline

Introduction to Actuarial Modelling

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Components of an Actuarial Model

Limitations of Models

Deterministic vs Stochastic Models

Time Horizons

Model Analysis (Stress, Sensitivity, Scenario Analysis)

Communicating Model Results

Resources: Slides and Notes