HUMBER COLLEGE 2022
BEST FINDINGD ERM Case
Study
Introduction and Recommendations
The case study is an integral part of the study material for the ERM exam. Some exam questions will
be based on the material provided in this document.
This case study presents information for the following companies:
Caerus Consulting (a global risk management and advisory consulting firm) and its clients
(including financial, automotive, and energy companies)
Lyon Corporation (a financial services holding company)
Simple Life Insurance Company (SLIC)
AHA Health (a health insurance company)
Pryde P&C (a general insurance company)
Helios (a non-US insurance company)
Various other companies that are potential partners or acquisition candidates
When you register for the ERM exam, you will select from one of six reading extensions. Please note
that for those who are pursuing an FSA, the extension selected for this exam need not match the
track selected for fellowship.
The case study is organized into sections. All candidates are responsible for the material in the first
two sections, covering Caerus and its clients (Section 1) and Lyon Corporation (Section 2).
Examination questions on both the three-hour core and one-hour extension-specific portions of the
exam may be based on material in these common sections of the case study.
The case study also includes extension-specific sections, as described below, that may be the basis for
questions appearing in the one-hour extension-specific portion of the exam.
You are encouraged to read this case study in conjunction with the recommended study materials.
This will help you become familiar with the information that is provided in this case study and assist
you in putting syllabus readings in context. The case study should be read critically, with the
understanding that it is meant to depict hypothetical organizations with some good policies and some
flaws; it is not a representation of best practices.
All candidates are encouraged to read through the entire case study to gain an overview of the
consulting firm, its client companies, and Lyon Corporation.
In addition to Sections 1 and 2, which are applicable to all candidates:
(a) Candidates who elect the Individual Life and Annuities Extension will answer questions based
on Section 4. Simple Life Insurance Company (SLIC), excluding the details of Section 4.14;
(b) Candidates who elect the Group and Health Extension will answer questions based on Section
1
,5. Health Insurance Companies, excluding the details of Section 5.18;
2
, (c) Candidates who elect the General Insurance Extension will answer questions based on Section
6. Pryde Property & Casualty, excluding the details of Section 6.18;
(d) Candidates who elect the Retirement Benefits Extension will answer questions based on
information about the pension plans sponsored by SLIC, AHA, Eureka (a potential AHA
acquisition), and Pryde, specifically Sections 4.14, 5.17 (Eureka information only), 5.18, and
6.18 (but such candidates should review all of Sections 4, 5, and 6 to understand how the
pension plans fit within the companies);
(e) Candidates who elect the Investment Extension will answer questions based on investment
information for SLIC and the pension plan sponsored by SLIC, specifically Sections 4.3 through
4.6, 4.9, and 4.11 through 4.14 (but such candidates should review all of Section 4 to
understand how the investments and the pension plan relate to SLIC); and
(f) Candidates who elect the General Corporate ERM Extension will answer questions based on
the information presented in Section 3.
It is important that you become familiar with the information presented in the case study that may
pertain to the questions you will attempt in the exam. All candidates are expected to think about ERM
holistically and how the issues identified in the core part of the exam and their respective extensions
will affect the ERM processes of the organization as a whole.
An electronic copy of this case study will be provided to you at the exam. You will not be allowed to
bring your copy of this case study into the exam room.
The following table of contents should assist you in locating information within the case study.
This and the following pages contain tables for the standard normal distribution. These tables will be
available as part of this case study at the examination and are for use in solving all problems on the
examination, including those not related to the case study.
TABLES FOR THE STANDARD NORMAL DISTRIBUTION
Values of z for selected probabilities that Z≤z.
Pr(Z≤z) 0.800 0.850 0.900 0.950 0.975 0.990 0.995
z 0.842 1.036 1.282 1.645 1.960 2.326 2.576
3
, Table for N(x) when x≥ 0. Use interpolation with these tables. For example, N(0.6278) = N(0.62) +
0.78[N(0.63) – N(0.62)] = 0.7324 + 0.78(0.7357 – 0.7324) = 0.7350.
x 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.5000 0.5040 0.5080 0.5120 0.5160 0.5199 0.5239 0.5279 0.5319 0.5359
0.1 0.5398 0.5438 0.5478 0.5517 0.5557 0.5596 0.5636 0.5675 0.5714 0.5753
0.2 0.5793 0.5832 0.5871 0.5910 0.5948 0.5987 0.6026 0.6064 0.6103 0.6141
0.3 0.6179 0.6217 0.6255 0.6293 0.6331 0.6368 0.6406 0.6443 0.6480 0.6517
0.4 0.6554 0.6591 0.6628 0.6664 0.6700 0.6736 0.6772 0.6808 0.6844 0.6879
0.5 0.6915 0.6950 0.6985 0.7019 0.7054 0.7088 0.7123 0.7157 0.7190 0.7224
0.6 0.7257 0.7291 0.7324 0.7357 0.7389 0.7422 0.7454 0.7486 0.7517 0.7549
0.7 0.7580 0.7611 0.7642 0.7673 0.7704 0.7734 0.7764 0.7794 0.7823 0.7852
0.8 0.7881 0.7910 0.7939 0.7967 0.7995 0.8023 0.8051 0.8078 0.8106 0.8133
0.9 0.8159 0.8186 0.8212 0.8238 0.8264 0.8289 0.8315 0.8340 0.8365 0.8389
1.0 0.8413 0.8438 0.8461 0.8485 0.8508 0.8531 0.8554 0.8577 0.8599 0.8621
1.1 0.8643 0.8665 0.8686 0.8708 0.8729 0.8749 0.8770 0.8790 0.8810 0.8830
1.2 0.8849 0.8869 0.8888 0.8907 0.8925 0.8944 0.8962 0.8980 0.8997 0.9015
1.3 0.9032 0.9049 0.9066 0.9082 0.9099 0.9115 0.9131 0.9147 0.9162 0.9177
1.4 0.9192 0.9207 0.9222 0.9236 0.9251 0.9265 0.9279 0.9292 0.9306 0.9319
1.5 0.9332 0.9345 0.9357 0.9370 0.9382 0.9394 0.9406 0.9418 0.9429 0.9441
1.6 0.9452 0.9463 0.9474 0.9484 0.9495 0.9505 0.9515 0.9525 0.9535 0.9545
1.7 0.9554 0.9564 0.9573 0.9582 0.9591 0.9599 0.9608 0.9616 0.9625 0.9633
1.8 0.9641 0.9649 0.9656 0.9664 0.9671 0.9678 0.9686 0.9693 0.9699 0.9706
1.9 0.9713 0.9719 0.9726 0.9732 0.9738 0.9744 0.9750 0.9756 0.9761 0.9767
2.0 0.9772 0.9778 0.9783 0.9788 0.9793 0.9798 0.9803 0.9808 0.9812 0.9817
2.1 0.9821 0.9826 0.9830 0.9834 0.9838 0.9842 0.9846 0.9850 0.9854 0.9857
2.2 0.9861 0.9864 0.9868 0.9871 0.9875 0.9878 0.9881 0.9884 0.9887 0.9890
2.3 0.9893 0.9896 0.9898 0.9901 0.9904 0.9906 0.9909 0.9911 0.9913 0.9916
2.4 0.9918 0.9920 0.9922 0.9925 0.9927 0.9929 0.9931 0.9932 0.9934 0.9936
2.5 0.9938 0.9940 0.9941 0.9943 0.9945 0.9946 0.9948 0.9949 0.9951 0.9952
2.6 0.9953 0.9955 0.9956 0.9957 0.9959 0.9960 0.9961 0.9962 0.9963 0.9964
2.7 0.9965 0.9966 0.9967 0.9968 0.9969 0.9970 0.9971 0.9972 0.9973 0.9974
2.8 0.9974 0.9975 0.9976 0.9977 0.9977 0.9978 0.9979 0.9979 0.9980 0.9981
2.9 0.9981 0.9982 0.9982 0.9983 0.9984 0.9984 0.9985 0.9985 0.9986 0.9986
3.0 0.9987 0.9987 0.9987 0.9988 0.9988 0.9989 0.9989 0.9989 0.9990 0.9990
3.1 0.9990 0.9991 0.9991 0.9991 0.9992 0.9992 0.9992 0.9992 0.9993 0.9993
3.2 0.9993 0.9993 0.9994 0.9994 0.9994 0.9994 0.9994 0.9995 0.9995 0.9995
3.3 0.9995 0.9995 0.9995 0.9996 0.9996 0.9996 0.9996 0.9996 0.9996 0.9997
3.4 0.9997 0.9997 0.9997 0.9997 0.9997 0.9997 0.9997 0.9997 0.9997 0.9998
3.5 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998
3.6 0.9998 0.9998 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999
3.7 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999
3.8 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999
3.9 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
4
BEST FINDINGD ERM Case
Study
Introduction and Recommendations
The case study is an integral part of the study material for the ERM exam. Some exam questions will
be based on the material provided in this document.
This case study presents information for the following companies:
Caerus Consulting (a global risk management and advisory consulting firm) and its clients
(including financial, automotive, and energy companies)
Lyon Corporation (a financial services holding company)
Simple Life Insurance Company (SLIC)
AHA Health (a health insurance company)
Pryde P&C (a general insurance company)
Helios (a non-US insurance company)
Various other companies that are potential partners or acquisition candidates
When you register for the ERM exam, you will select from one of six reading extensions. Please note
that for those who are pursuing an FSA, the extension selected for this exam need not match the
track selected for fellowship.
The case study is organized into sections. All candidates are responsible for the material in the first
two sections, covering Caerus and its clients (Section 1) and Lyon Corporation (Section 2).
Examination questions on both the three-hour core and one-hour extension-specific portions of the
exam may be based on material in these common sections of the case study.
The case study also includes extension-specific sections, as described below, that may be the basis for
questions appearing in the one-hour extension-specific portion of the exam.
You are encouraged to read this case study in conjunction with the recommended study materials.
This will help you become familiar with the information that is provided in this case study and assist
you in putting syllabus readings in context. The case study should be read critically, with the
understanding that it is meant to depict hypothetical organizations with some good policies and some
flaws; it is not a representation of best practices.
All candidates are encouraged to read through the entire case study to gain an overview of the
consulting firm, its client companies, and Lyon Corporation.
In addition to Sections 1 and 2, which are applicable to all candidates:
(a) Candidates who elect the Individual Life and Annuities Extension will answer questions based
on Section 4. Simple Life Insurance Company (SLIC), excluding the details of Section 4.14;
(b) Candidates who elect the Group and Health Extension will answer questions based on Section
1
,5. Health Insurance Companies, excluding the details of Section 5.18;
2
, (c) Candidates who elect the General Insurance Extension will answer questions based on Section
6. Pryde Property & Casualty, excluding the details of Section 6.18;
(d) Candidates who elect the Retirement Benefits Extension will answer questions based on
information about the pension plans sponsored by SLIC, AHA, Eureka (a potential AHA
acquisition), and Pryde, specifically Sections 4.14, 5.17 (Eureka information only), 5.18, and
6.18 (but such candidates should review all of Sections 4, 5, and 6 to understand how the
pension plans fit within the companies);
(e) Candidates who elect the Investment Extension will answer questions based on investment
information for SLIC and the pension plan sponsored by SLIC, specifically Sections 4.3 through
4.6, 4.9, and 4.11 through 4.14 (but such candidates should review all of Section 4 to
understand how the investments and the pension plan relate to SLIC); and
(f) Candidates who elect the General Corporate ERM Extension will answer questions based on
the information presented in Section 3.
It is important that you become familiar with the information presented in the case study that may
pertain to the questions you will attempt in the exam. All candidates are expected to think about ERM
holistically and how the issues identified in the core part of the exam and their respective extensions
will affect the ERM processes of the organization as a whole.
An electronic copy of this case study will be provided to you at the exam. You will not be allowed to
bring your copy of this case study into the exam room.
The following table of contents should assist you in locating information within the case study.
This and the following pages contain tables for the standard normal distribution. These tables will be
available as part of this case study at the examination and are for use in solving all problems on the
examination, including those not related to the case study.
TABLES FOR THE STANDARD NORMAL DISTRIBUTION
Values of z for selected probabilities that Z≤z.
Pr(Z≤z) 0.800 0.850 0.900 0.950 0.975 0.990 0.995
z 0.842 1.036 1.282 1.645 1.960 2.326 2.576
3
, Table for N(x) when x≥ 0. Use interpolation with these tables. For example, N(0.6278) = N(0.62) +
0.78[N(0.63) – N(0.62)] = 0.7324 + 0.78(0.7357 – 0.7324) = 0.7350.
x 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.5000 0.5040 0.5080 0.5120 0.5160 0.5199 0.5239 0.5279 0.5319 0.5359
0.1 0.5398 0.5438 0.5478 0.5517 0.5557 0.5596 0.5636 0.5675 0.5714 0.5753
0.2 0.5793 0.5832 0.5871 0.5910 0.5948 0.5987 0.6026 0.6064 0.6103 0.6141
0.3 0.6179 0.6217 0.6255 0.6293 0.6331 0.6368 0.6406 0.6443 0.6480 0.6517
0.4 0.6554 0.6591 0.6628 0.6664 0.6700 0.6736 0.6772 0.6808 0.6844 0.6879
0.5 0.6915 0.6950 0.6985 0.7019 0.7054 0.7088 0.7123 0.7157 0.7190 0.7224
0.6 0.7257 0.7291 0.7324 0.7357 0.7389 0.7422 0.7454 0.7486 0.7517 0.7549
0.7 0.7580 0.7611 0.7642 0.7673 0.7704 0.7734 0.7764 0.7794 0.7823 0.7852
0.8 0.7881 0.7910 0.7939 0.7967 0.7995 0.8023 0.8051 0.8078 0.8106 0.8133
0.9 0.8159 0.8186 0.8212 0.8238 0.8264 0.8289 0.8315 0.8340 0.8365 0.8389
1.0 0.8413 0.8438 0.8461 0.8485 0.8508 0.8531 0.8554 0.8577 0.8599 0.8621
1.1 0.8643 0.8665 0.8686 0.8708 0.8729 0.8749 0.8770 0.8790 0.8810 0.8830
1.2 0.8849 0.8869 0.8888 0.8907 0.8925 0.8944 0.8962 0.8980 0.8997 0.9015
1.3 0.9032 0.9049 0.9066 0.9082 0.9099 0.9115 0.9131 0.9147 0.9162 0.9177
1.4 0.9192 0.9207 0.9222 0.9236 0.9251 0.9265 0.9279 0.9292 0.9306 0.9319
1.5 0.9332 0.9345 0.9357 0.9370 0.9382 0.9394 0.9406 0.9418 0.9429 0.9441
1.6 0.9452 0.9463 0.9474 0.9484 0.9495 0.9505 0.9515 0.9525 0.9535 0.9545
1.7 0.9554 0.9564 0.9573 0.9582 0.9591 0.9599 0.9608 0.9616 0.9625 0.9633
1.8 0.9641 0.9649 0.9656 0.9664 0.9671 0.9678 0.9686 0.9693 0.9699 0.9706
1.9 0.9713 0.9719 0.9726 0.9732 0.9738 0.9744 0.9750 0.9756 0.9761 0.9767
2.0 0.9772 0.9778 0.9783 0.9788 0.9793 0.9798 0.9803 0.9808 0.9812 0.9817
2.1 0.9821 0.9826 0.9830 0.9834 0.9838 0.9842 0.9846 0.9850 0.9854 0.9857
2.2 0.9861 0.9864 0.9868 0.9871 0.9875 0.9878 0.9881 0.9884 0.9887 0.9890
2.3 0.9893 0.9896 0.9898 0.9901 0.9904 0.9906 0.9909 0.9911 0.9913 0.9916
2.4 0.9918 0.9920 0.9922 0.9925 0.9927 0.9929 0.9931 0.9932 0.9934 0.9936
2.5 0.9938 0.9940 0.9941 0.9943 0.9945 0.9946 0.9948 0.9949 0.9951 0.9952
2.6 0.9953 0.9955 0.9956 0.9957 0.9959 0.9960 0.9961 0.9962 0.9963 0.9964
2.7 0.9965 0.9966 0.9967 0.9968 0.9969 0.9970 0.9971 0.9972 0.9973 0.9974
2.8 0.9974 0.9975 0.9976 0.9977 0.9977 0.9978 0.9979 0.9979 0.9980 0.9981
2.9 0.9981 0.9982 0.9982 0.9983 0.9984 0.9984 0.9985 0.9985 0.9986 0.9986
3.0 0.9987 0.9987 0.9987 0.9988 0.9988 0.9989 0.9989 0.9989 0.9990 0.9990
3.1 0.9990 0.9991 0.9991 0.9991 0.9992 0.9992 0.9992 0.9992 0.9993 0.9993
3.2 0.9993 0.9993 0.9994 0.9994 0.9994 0.9994 0.9994 0.9995 0.9995 0.9995
3.3 0.9995 0.9995 0.9995 0.9996 0.9996 0.9996 0.9996 0.9996 0.9996 0.9997
3.4 0.9997 0.9997 0.9997 0.9997 0.9997 0.9997 0.9997 0.9997 0.9997 0.9998
3.5 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998 0.9998
3.6 0.9998 0.9998 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999
3.7 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999
3.8 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999 0.9999
3.9 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
4
