Application
This unit describes skills and knowledge required to monitor and analyse risks, and determine the risk rating associated with an existing or new investment or insurance product.
It applies to individuals working in job roles involving specialist knowledge and functions such as underwriting in a range of insurance sectors and may be applied within organisations of various sizes and across a range of client bases.
Work functions in the occupational areas where this unit may be used are subject to regulatory requirements. Refer to the FNS Implementation Guide Companion Volume or the relevant regulator for specific guidance on requirements.
Elements and Performance Criteria
ELEMENT | PERFORMANCE CRITERIA |
Elements describe the essential outcomes. | Performance criteria describe the performance needed to demonstrate achievement of the element. |
1. Monitor and collect information on risk factors | 1.1 Identify product type so that nature of risk can be identified and handled accordingly 1.2 Identify, monitor and collect relevant information |
2. Analyse data collected | 2.1 Establish reliability and validity of data 2.2 Assess risk factors associated with product against known exposure factors 2.3 Analyse all information collected on risk factors for product using appropriate methods and documentation 2.4 Identify need for additional information to further evaluate risk |
3. Determine risk rating for product | 3.1 Determine acceptability of risk using all available information in accordance with organisational policy and procedures, and underwriting guidelines 3.2 Establish risk rating that minimises risk liability within delegated authority 3.3 Document basis for risk rating decision 3.4 Consider compliance with relevant legislation and organisational policy 3.5 Document risk rating information in format that may be used to guide underwriting and product or policy amendment decisions |
4. Communicate results to appropriate personnel | 4.1 Present results of research and analysis to appropriate personnel in a clear, concise format 4.2 Review risk rating recommendations against existing products and organisational policy 4.3 Finalise risk rating recommendations and notify relevant personnel |
Evidence of Performance
Evidence of the ability to:
collect, analyse and interpret information relevant for assessing risk
accurately determine acceptable risk rating for the organisation’s products
effectively document, communicate and monitor the risk ratings
comply with organisational policy, procedures, legislation, regulations and industry codes of practice
present research findings in a suitable format to enable assessment of liabilities.
Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.
Evidence of Knowledge
To complete the unit requirements safely and effectively, the individual must:
describe basic actuarial principles used to assess risk and return on investment
identify the key features of relevant legislation, regulatory guidelines and industry sector codes of practice
explain industry market position relative to product or line of business
outline organisational information technology systems required for determining risk
describe organisational policy, procedures, underwriting guidelines and authorities covering:
best underwriting guides (BUG)
loss control guides
identify and describe insurance and investment products and the risks associated with these products
define the difference between treaty and facultative reinsurance as it applies to risk
explain the relationship between underwriting and rate making
identify and apply relevant legislation, regulatory guidelines and industry sector compliance requirements as they apply to:
insurance contracts
privacy
consumer protection
financial services
corporations
describe risk analysis and prevention methods and their application
explain types of risk and identify the probability of occurrence.
Assessment Conditions
Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the insurance services field of work and include access to:
organisational records
organisational policy, procedures, legislation and regulations as they relate to contracts of insurance
a range of common technology and software.
Assessors must satisfy NVR/AQTF assessor requirements.
Foundation Skills
This section describes language, literacy, numeracy and employment skills incorporated in the performance criteria that are required for competent performance.
Skill | Performance Criteria | Description |
Reading | 1.1, 1.2, 2.1-2.4, 3.1, 4.2 | Critically analyses complex documentation from a variety of sources and consolidates information relating to specific criteria to determine requirements |
Writing | 2.3, 3.3, 3.5, 4.1, 4.3 | Prepares a range of textual information appropriate for audience and for informal and formal purposes Accurately records information, and prepares correspondence and documentation using clear language and organisational formats and protocols |
Oral Communication | 4.1, 4.3 | Uses collaborative and inclusive techniques, including active listening and questioning, to convey and clarify information and to confirm understanding |
Numeracy | 2.1, 2.2, 2.3, 3.1, 3.2, 4.2 | Performs mathematical calculations to analyse financial information, costs and values to accurately determine risk |
Navigate the world of work | 3.1, 3.2, 3.4, 4.2 | Follows policies, procedures and legislative requirements, and identifies organisational implications of new legislation or regulation Modifies or develops organisational policy and procedures to comply with legislative requirements and organisational goals |
Interact with others | 4.1, 4.3 | Implements strategies for a diverse range of colleagues and clients to build rapport and foster strong relationships |
Get the work done | 1.1, 1.2, 2.1-2.4, 3.1, 3.2, 3.3, 3.4, 3.5, 4.2, 4.3 | Plans and sequences complex tasks and workload, negotiating key aspects with others and taking into account capabilities, efficiencies and effectiveness Responds intuitively to problems requiring immediate resolution, drawing on past experiences to focus on the cause of a problem rather than the symptom Applies systematic and analytical decision-making processes for complex and non-routine situations Uses digital technologies to access, enter and store information required to complete work tasks |
Sectors
Insurance services