Welcome to the Art of Visual Communication!

In the CP2 exam, your goal isn't just to build a model that works; it’s to build a model that communicates. This chapter focuses on how to create charts that turn a wall of numbers into a clear, persuasive story. Think of a chart as a "shortcut" for your reader’s brain—it helps them see patterns, trends, and outliers instantly without digging through thousands of spreadsheet cells.

Don't worry if you aren't a "graphic designer." In CP2, we aren't looking for beauty; we are looking for clarity, accuracy, and professionalism.

Quick Tip: In the CP2 exam, you are often asked to produce a "Summary Report." A well-placed chart in that report can earn you significant communication marks!


1. Why Do We Use Charts?

In the context of "Development of a model with clear documentation," charts serve two main purposes:

1. Validation: To check if your model results "look right" (e.g., does the projected fund value grow over time as expected?).
2. Communication: To explain your findings to a stakeholder (like a senior actuary or a client) who doesn't have time to look at your formulas.

Analogy: Imagine trying to explain a spiral staircase using only words while keeping your hands in your pockets. It’s hard, right? Now imagine just drawing it. That’s the power of a chart in an actuarial report!


2. Choosing the Right Tool for the Job

One of the most common mistakes students make is picking the "coolest" looking chart rather than the most appropriate one. Here is a simple guide to choosing the right type:

A. Line Charts: For Trends Over Time

Use these when you want to show how a variable changes across a period (e.g., years, months).
Example: Projecting the solvency ratio of an insurance company over the next 10 years.

B. Column or Bar Charts: For Comparisons

Use these to compare different categories or discrete time buckets.
Example: Comparing the total claims paid across five different geographical regions.

C. Scatter Plots: For Relationships

Use these when you want to see if one variable affects another.
Example: Showing the relationship between Age and Claim Frequency.

D. Pie Charts: For Proportions (Use with Caution!)

Pie charts show parts of a whole. Warning: Actuaries generally prefer bar charts because the human eye is bad at comparing the "slices" of a pie accurately. Only use these for very simple breakdowns (e.g., "60% Equity / 40% Bonds").

Key Takeaway: If you want to show change over time, use a Line Chart. If you want to compare items, use a Bar Chart.

3. The "T.A.L.L." Checklist for Perfect Charts

To ensure your charts meet IFoA standards and are "audit-trail friendly," remember the mnemonic T.A.L.L.:

1. T - Title: Every chart needs a clear, descriptive title. It should tell the reader exactly what they are looking at.
Bad Title: "Results Chart"
Good Title: "Projected Fund Value vs. Target Retirement Amount (2024–2044)"

2. A - Axis Labels: Both the X-axis (horizontal) and Y-axis (vertical) must be labeled. You must include units (e.g., £, %, or "Years").
Example: Don't just write "Time." Write "Time (Years)."

3. L - Legend: If your chart has more than one line or data series, you must include a legend (key) so the reader knows which is which.

4. L - Layout: Keep it clean. Remove unnecessary "chart junk" like 3D effects, dark backgrounds, or distracting gridlines. The data should be the star of the show.


4. Step-by-Step: Creating a Professional Chart

If you're feeling stuck on how to present your data during the exam, follow these steps:

  1. Identify the "So What?": Before making the chart, ask yourself: "What is the one thing I want the reader to notice?" (e.g., "The fund runs out of money in Year 12").
  2. Select Data Carefully: Don't highlight your entire spreadsheet. Select only the summary results you need.
  3. Insert and Clean: Insert the chart in Excel, then immediately add your T.A.L.L. elements.
  4. Format for Readability: Ensure the font size is large enough to read and that colors are distinct (especially if someone might print your report in black and white!).
  5. Link to Documentation: In your summary report, refer to the chart by name. Example: "As shown in Figure 1, the claims peak during the winter months..."

5. Common Pitfalls to Avoid

Even the best students fall into these traps. Keep an eye out for these "Chart Crimes":

  • Starting the Y-Axis at a non-zero value: This can make small differences look huge. Only do this if you have a very good reason and you clearly highlight it.
  • Too many data series: If your line chart looks like a bowl of multi-colored spaghetti (10+ lines), it’s useless. Group the data or use multiple charts.
  • 3D Charts: Never use 3D bars or pies. They distort the perspective and make it impossible to read the actual values against the axis.
  • Missing Units: If your Y-axis says "1,000", is that £1,000, $1,000, or 1,000 people? Always specify!

6. Summary Quick Review

Quick Check: Is your chart ready for the CP2 marker?

  • Does it have a descriptive Title?
  • Are both Axes labeled with units (e.g., £m)?
  • Is there a Legend for multiple data sets?
  • Is it Simple (no 3D, no clutter)?
  • Does it Support the text in your report?

Remember: In CP2, your model documentation should be "standalone." A person reading your chart should understand the result without having to look at your Excel formulas!


Final Encouragement: Creating charts is often the most satisfying part of the exam because it’s where your hard work finally becomes visible. Take your time to make them clear, and they will do a lot of the "explaining" for you!