Instructions To Students

ASSIGNMENT 2

ACST4032 / 8041 Actuarial Control Cycle 2

1. This assignment is to be completed individually.

2. Page limit: Please limit your assignment to a 5 page word document. Appendices and references

will not count towards the page limit.

3. You will need to do your own research and reference other material to complete this

assignment. Please ensure you properly reference your work. You must adhere to appropriate practices regarding referencing the work of others in any work that you do. Accepted academic practice for referencing sources that you use in presentations and assignments can be found via the links on the Wattle site, under the file named “Academic Integrity”.

4. Assignments are to be submitted using Turnitin on the course wattle site. Submitted assignments must include the signed declaration page provided on the front page of this document. Please keep a copy of the assignment for your records. The ANU is using Turnitin to enhance student citation and referencing techniques, and to assess assignment submissions as a component of the University's approach to managing Academic Integrity. University policies on plagiarism will be strictly enforced.

5. This assignment must be submitted by 3pm on Friday 13th October. If it is submitted later than this time, your mark for this assignment will be 0%.

Total Marks = 50

This assignment will count towards 10% of your final grade for the course.

and

��� how banks can assess solvency with reference to assets and liabilities.

Part B: More specific detail on the banking crises in March 2023 including:

(10 marks)

The 2023 Banking Crises

In March 2023 there was a serious banking crises in the U.S. (and beyond) that unfolded within a matter of weeks. Several banks were affected by this crises and regulatory authorities were required to intervene. Assume you are working for an actuarial consultancy in another country that is reviewing their capital and solvency regulations for banks. Historically this country has had a very sound financial system with no major bank failures due to strong regulations that currently exist. They use the latest Basel framework and principles when setting their banking regulations but have set specific regulations for the banking context of their own country. The government of this country has asked you to write a report on the 2023 banking crises to help them focus on specific aspects of their capital and solvency regulations for review in light of this crises. Your report should cover the following:

Part A: A brief general overview of:

��� the main risks faced by banks when running their business;

��� why it is important for banks to hold adequate capital;

��� what the main types of liabilities held by banks are and how these differ to insurance companies;

��� why banks need to value assets and liabilities and for what purposes these valuations can be

used;

��� different approaches to dealing with uncertainty when valuing assets and liabilities for banks;

  ��� A detailed description of specific events that unfolded during and leading up to the banking crises that may have contributed to the collapse of several banks;

��� A detailed discussion on the key specific issues and weaknesses several banks faced relating to risks, capital and solvency that caused their collapse and the subsequent banking crises. You may focus your discussion on the major banks in the U.S. that collapsed during the crises;

��� A detailed discussion on what the major concerns of regulatory authorities were during the crises, how they responded to the crises and whether their actions sufficiently addressed these concerns; and

��� Any other relevant information related to the crises and subsequent recovery both in the U.S. and internationally.

(25 marks)

Part C: Your recommendations (with reasoning) on which aspects of capital and solvency regulation the government should focus on to prevent a crises like this unfolding in their country. Your recommendations should be targeted at the key issues and weaknesses you have identified in your research of the 2023 banking crises.

(15 marks)