Statistics Regulatory Frameworks & Compliance 5 — Questions and Answers
Question 1: In actuarial science, which regulatory body in the U.S. sets the professional standards that actuaries must follow when performing statistical analyses for insurance filings?
- Securities and Exchange Commission
- Actuarial Standards Board (Correct answer)
- National Association of Insurance Commissioners
- Financial Industry Regulatory Authority
Correct answer: Actuarial Standards Board
The Actuarial Standards Board (ASB) issues Actuarial Standards of Practice (ASOPs) governing how actuaries perform and document statistical analyses.
Question 2: Under the Fair Credit Reporting Act, when an adverse action is taken based on statistical scoring models, lenders must provide consumers with:
- The exact algorithm used to compute the score
- The specific reasons for the adverse action (Correct answer)
- The full credit history considered
- A 30-day waiting period before the decision is final
Correct answer: The specific reasons for the adverse action
FCRA requires creditors to provide specific reason codes explaining which factors most negatively affected the consumer's credit score.
Question 3: Which type of error is most relevant in FDA drug approval decisions when considering the regulatory risk of approving an ineffective drug?
- Type I error (false positive) (Correct answer)
- Type II error (false negative)
- Sampling error
- Measurement error
Correct answer: Type I error (false positive)
A Type I error in drug approval means concluding a drug is effective when it is not, representing the risk of approving an ineffective treatment.
Question 4: The concept of 'data governance' in regulatory compliance primarily refers to:
- Using only government-collected data sources
- Policies ensuring data quality, integrity, and authorized use (Correct answer)
- Outsourcing statistical analysis to certified agencies
- Restricting data access to statisticians only
Correct answer: Policies ensuring data quality, integrity, and authorized use
Data governance encompasses the policies, procedures, and accountability structures that ensure data is accurate, consistent, and used appropriately.
Question 5: Under SEC Regulation Fair Disclosure (Reg FD), what statistical or analytical materials must be disclosed publicly?
- Only audited financial statements
- Any material non-public information disclosed selectively to market professionals (Correct answer)
- Raw transaction-level data underlying all financial models
- Proprietary trading algorithms used by registered investment advisors
Correct answer: Any material non-public information disclosed selectively to market professionals
Reg FD requires companies to publicly disclose any material non-public information they selectively disclose to market professionals.
Question 6: In the context of federal statistical agencies, 'respondent burden' refers to:
- The cost to agencies of processing survey data
- The time and effort required of survey participants to respond (Correct answer)
- Legal liability for inaccurate survey responses
- The statistical weight assigned to rare population segments
Correct answer: The time and effort required of survey participants to respond
Respondent burden is the time, effort, and resources required of individuals or organizations to complete surveys, which agencies must minimize under the Paperwork Reduction Act.
Question 7: Which statistical concept underlies the 'minimum detectable effect' calculation required in power analyses for federally funded evaluation studies?
- Central limit theorem
- Statistical power (1 - β) (Correct answer)
- Confidence interval width
- Sampling frame coverage
Correct answer: Statistical power (1 - β)
The minimum detectable effect is derived from statistical power (1 - β), representing the smallest true effect size a study can reliably detect at a given sample size.
Statistics Regulatory Frameworks & Compliance 5
In actuarial science, which regulatory body in the U.S. sets the professional standards that actuaries must follow when performing statistical analyses for insurance filings?