Sensitivity analysis for model risk management
Sensitivity testing with dependence has the potential for a wide range of applications in reporting, such as for Solvency II, IFRS 17, and balance sheet valuation.
Since the pandemic turned all of our lives upside down last year, we’ve seen an uptick in clients seeking creative ways to trim organizational costs while minimizing the negative impact on employees—such as voluntary early retirement programs. Voluntary early retirement programs can offer a win-win situation for employers and employees alike, giving employees nearing retirement a financial incentive to leave early while achieving a reduction in labor cost for employers.
This case study shows how Milliman communication consultants helped one such client successfully navigate a voluntary early retirement program.
When the coronavirus pandemic struck in early 2020, this organization, like so many others, suddenly found itself facing unexpected financial stress. A reduction in workforce was on the table but first it decided to offer a voluntary early retirement program to a small group of retirement eligible employees in late summer.
This project involved several challenges, including sensitive messaging to accommodate yet not reveal the potential 10% reduction in the workforce on the horizon. The reduction in force was already firmly scheduled, so getting out in front of it required a greatly accelerated timeline. In fact, we had just three weeks from the initial kickoff meeting to create the personalized election packets and deliver them securely to participants. Communications that include personal data require specialized processes and protocols that respect the confidentiality and privacy of that data.
Milliman helped set the strategy and implemented the communications for the early retirement offer. Key deliverables included: announcement to leadership; email to managers; brief informational articles for the company intranet; personalized election packet for eligible employees; script for call center representatives; and several follow-up reminder emails. The client’s legal counsel prepared the severance plan and participation agreement included in the election packet. Milliman’s pension website also offered a web modeling tool for those who were considering simultaneous retirement under the pension plan.
The Milliman communications team used several key strategies to address the specific challenges of this project.
In the end, about 35% of the approximately 120 participants voluntarily accepted the early retirement offer. The client was thrilled with the overall outcome, and specifically the communications, which were well received by employees and contributed to an efficient and snag-free election process.