Task 1

[deezydowntown]

Starting discussion

[Lynne]

I find it hard to think of risk mitigation strategies in terms of the market risk since we can't beat the market in any way. Any thoughts? 

[MidwesternActuary]

I believe you can mitigate market risk through a properly diversified portfolio. This ensures you have only a limited amount of downside and you're able to pay expenses. Also taking less risk potentially.

[Matthew Rashford]

I take it we have all consulted Module 4 and Segal?

[Lynne]

I did. I used the Chapter 4 to come up with risks. 

[deezydowntown]

How many risks did you have in the end, and how many did you have as key risks?

[Matthew Rashford]

I'm currently at fifteen risks.  I haven't gone back to determine which ones are key risks.

[deezydowntown]

I finished with exactly 15, and I wound up using four as key risks

[LyActuary]

I had 12 risks. I picked one key risk from each category. 

[Beats S]

What do you guys think about the attrition rate as a risk? I know 65% is built in but not explicitly, I do think depending on the funding situation, the board can raise or lower the requirement but seems like I'm getting mixed reviews about the attrition rate as a risk or an assumption for later tasks. 

[LyActuary]

I am considering negative risks. So attrition rate will have to be lower to be a risk. 

However, a lower attrition rate means fewer students are dropping out or failing, which should be a thing to celebrate. 

Considering that, I think it would be a little weird to include it as a risk. 

[deezydowntown]

That's definitely a risk to the financial health of the fund.  I'd actually say a pretty major one.  Look at Task 6

[Beats S]

Yea, I thought it would be a risk because they can change the percentage at any time. I've been seeing mixed reviews about attrition rate changes..... just wanted some opinions

[Surin Patel]

Where are you getting the 65% as an attrition rate? Are attrition rates not the table broken down by year the student is in school with the rate fluctuating between 1%, 10% and 30%? I only see 65% as a requirement of the grade average to maintain a funded status as a student.

[mcfarkleberg]

The attrition rate assumption is based on the student growth/attrition table.  In the college years, attrition is likely impacted by students failing to keep their grades up.  If a student was 100% funded, then their grades dropped below 65% AND they lost funding, you can imagine that they would feel discourages from continuing college.