Chinese Actuary - Computer - Crisis

One of the interesting aspects of the Chinese language is that words are like little pictures, pictograms or logographs, the so called 'characters'. Moreover, some words are a combination, or (better) a superposition, of several of those characters.

So the meaning of a Chinese word can be deducted by interpretation of the pictograms and relating them. And, as the saying is "A picture is worth a thousand words", you don't need to be an actuary to calculate the enormous expression-power of the Chinese language. Every word is like a book of words and expresses not only the rational meaning but also the embodied feeling (mood) that goes along with the the formal meaning.

The power of the Chinese language can be illustrated by three simple examples, the Chinese words for Actuary, Computer and Crisis:

1. Actuary
The Chinese word for Actuary is :精算师

Pronunciation: jing suan shyr

The Chinese word Actuary consists of three characters:

1. Jing, 精, means Skilled or Elite
2. Suàn, 算, means 'to calculate' or 'to count'
3. Shyr, 师, a suffix meaning 'a profession of' or a skilled or 'qualified practitioner of certain professions'

So, as a consequence, a stripped and therefore 'shortcoming' translation of the Chinese word for actuary would be: 'a skilled and qualified calculator'

Sources: Masteringmandarin, Translation, Wei Liu Dictionary,
Actuary Translated: A statistician who computes insurance risks and premiums.

2. Computer
The pictogram on the right means "computer" in Chinese. Actually, it consists of two characters that literally mean "Electric Brain", which the Chinese read as "computer".

However, as you may notice, the two main characters each exist of several sub-characters that also contribute and add meaning to the word 'Computer'.

Source, and more info at: Ebrain


3. Crisis
With the current credit crisis ( 信贷危机 xìndài wēijī) in mind, let's look at the Chinese word for 'crisis'. It consists of two characters




So in Chinese crisis means something like

Crisis = Danger + Opportunity

Let's apply this to daily business life.

No matter how great the danger in a crisis is, it also means a change of circumstances that creates space for new opportunities. It's an art to spot those opportunities when you're in the middle of a crisis.

But what if you're caught in a storm crisis:

Golden Rules Crisis Risk Management
In terms of risk management: If you're caught in the storm (trouble) and can't get out, don't try to. Try to get to the eye of the storm, where it's calm.

So when you're in the middle of a (credit) crisis :

• Don't run
• Set time still (Let time do the work)
• Keep your head together
• Wait for the opportunity, no matter how hard it is or how long it takes
  

Some more tips on how to behave in crisis situations you'll find on



APPROACHING A CONFLICT SITUATION

Credit Default Swaps explained

Untangling credit default swaps from Marketplace on Vimeo.

SOURCE

DNB report on Credit Crisis

As experienced actuaries you'll probably know that 'De Nederlandsche Bank' (DNB) is the Dutch supervisor on banks, pension funds, insurers and mutual funds.

Recently DNB reported about the effects of the credit crisis.

You may find the report in the recently published:

Statistical Bulletin March 2009

Main articles in this interesting bulletin discuss the following topics:

• Capital market financing more difficult and more expensive in 2008
• Dutch banks scaled down foreign activities
• Dutch pension funds fail in realizing indexation ambitions in 2009

The bulletin also includes a description of the fully revised statistics of investment funds.

Indexation
The Dutch save massively for their pensions. To supplement their future state old age pension, nearly 6 million employees save for a pension at a pension fund. At end-2007, over 2.5 million persons received a pension benefit.

These savings have accumulated into a collective nest egg of around EUR 575 billion, i.e. nearly EUR 80,000 per Dutch household (end-2008).

For many households, pension savings are by far their largest financial asset. As a result of the credit crisis, pension funds saw their financial position deteriorate. In 2008, the pension funds’ average nominal funding ratio dropped from 144% to 95%

Chart: Funding ratio.
Broken down by interest rate effect and return on equities

According to a survey among the largest 25 pension funds, the pension sector, too, is being impacted by the credit crisis.

Following catch-up indexation last year, pension benefits will probably be indexed on average at a mere 0.2% this year. This means a loss of purchasing power for pensioners, even though the price level has fallen since the summer of 2008. Many pension entitlements accrued by employees, too, are not being indexed.

In 2009, pension contributions will rise, especially those of employers with an independent company pension fund. Employees, too, will be paying higher contributions.

Interested? More info at DNB

SOURCE