Introduction to CS2
CS2 – Risk Modelling and Survival Analysis – is one of the most intellectually stimulating and mathematically rich subjects in the actuarial curriculum. It builds your foundation in modelling random events over time using probability theory and statistical techniques, making it vital for actuarial roles in life insurance, health insurance, and pension consulting.
Whether you're pursuing actuarial science through IFoA (UK) or IAI (India), mastering CS2 is a key milestone in your journey.
CS2 Structure: Two-Part Assessment
CS2 consists of two mandatory papers:
Paper A – Theory & Conceptual Understanding
- Mode: Word-based descriptive answers
- Duration: 3 hours 20 minutes
- Weight: 100 marks
- Focus: Focuses on the theory, derivations, and applications of models.
Paper B – R Programming & Report Writing
- Mode: RStudio + MS Word (no Excel)
- Duration: 1 hour 50 minutes
- Weight: 100 marks
- Focus: Evaluates your data handling and statistical computing using R.
Note: You must appear for both Paper A and Paper B in the same exam session.
CS2 Paper-Wise Weightage: IFoA vs IAI
Understanding how CM1 is evaluated is crucial to planning your preparation. While both Paper A and Paper B carry 100 marks each, the overall weightage differs slightly between the IFoA and IAI systems.
IFoA (UK) Exam Weightage
| Paper | Marks | Weightage in Final Score |
|---|---|---|
| CS2 Paper A | 100 | 70% |
| CS2 Paper B | 100 | 30% |
- The IFoA combines both Paper A and Paper B scores, applying a 70:30 weighting to calculate the final result.
- You must sit both papers in the same attempt to pass CS2 under IFoA.
IAI (India) Exam Weightage
| Paper | Marks | Weightage in Final Score |
|---|---|---|
| CS2 Paper A | 100 | 50% |
| CS2 Paper B | 100 | 50% |
- The IAI gives equal weight to Paper A and Paper B (50% each).
- Both parts must be attempted together, and a combined pass mark is required to clear CS2.
CS2 Syllabus Breakdown (Updated for 2025 – IFoA)
CS2 – Risk Modelling and Survival Analysis – focuses on five major topic areas, each contributing to your understanding of how actuaries model risk, survival outcomes, and use statistical tools in real-world applications.
1. Random Variables and Distributions for Risk Modelling (20%)
- Loss distributions (with and without risk sharing)
- Compound distributions (e.g., Poisson, Negative Binomial)
- Reinsurance modeling (excess of loss, proportional)
- Copulas and dependency modeling
- Extreme value theory and tail risk analysis
2. Time Series Analysis (20%)
- Stationarity, autocorrelation, and ARIMA models
- Random walks and multivariate time series
- Model identification, estimation, and diagnostics
- Applications in economics and finance (e.g., forecasting stock prices)
- Smoothing techniques and seasonal adjustments
3. Stochastic Processes (25%)
- Discrete vs continuous time processes
- Markov chains and Markov processes
- Poisson processes and inter-event time modeling
- Kolmogorov equations
- Duration-dependent transition modeling (e.g., sickness, marriage models)
- Simulation techniques for stochastic processes
4. Survival Models (25%)
- Lifetimes as random variables (tpx, qx, ex)
- Estimating survival functions with censoring (Kaplan-Meier, Nelson-Aalen)
- Proportional hazards and Cox regression models
- Graduation and smoothing techniques
- Mortality projections (Lee-Carter, Age-Period-Cohort models)
5. Machine Learning (10%)
- Bias-variance tradeoff
- Cross-validation and regularisation
- Supervised learning (regression/classification)
- Performance metrics: precision, recall, F1-score, ROC curves
- Unsupervised learning: PCA, k-means clustering
Top CS2 Preparation Tips
- Master Theory First: Build strong conceptual clarity in stochastic models and survival analysis before diving into R.
- Practice R Regularly: Don’t just read code – write, run, and debug it.
- Past Papers Are Gold: Solve at least 5 past papers with a timer – especially Paper B.
- Use CMP Notes + Practice Materials: Ensure you're using the 2025 curriculum; earlier CMPs are outdated.
- Mock Exams Help: Join guided mock sessions to assess your readiness and receive expert feedback.
Conclusion: CS2
CS2 challenges your analytical and technical abilities like no other. But with the right guidance and structured practice, you can conquer it confidently. Whether you're aiming for a top score or a solid pass, let SMONK.in be your academic partner for actuarial excellence.