The Canadian Institute of Actuaries (CIA) last published an educational note on financial condition testing (FCT) in April 2020. This educational note has been updated to reflect IFRS 17 concepts and terminology with an effective date of January 1, 2023.
Updates to the educational note
Notable updates include:
a) Updates to reflect IFRS 17, including guidance on FCT considerations associated with measurement under IFRS 17 and IFRS 17-specific modeling considerations.
b) Expanded discussion regarding adverse scenario selection and assessment of the percentile ranking of scenarios.
c) Expanded guidance on the role of going concern scenarios.
d) Expanded guidance regarding ripple effects and management actions.
e) Clarification regarding the requirement to use the wording prescribed in the Standards of Practice (SOP) for the FCT opinion.
f) The addition of climate-related risks, and technology and cyber risks to the major risk categories the actuary would consider for FCT analysis.