Reinventing the Actuary

Our ability to understand and manage risks, solve business problems, and create business solutions never stops evolving Tim Cardinal

Seizes business opportunities faster than a speeding bullet. Persuasion more powerful than a locomotive. Able to leap over risk crises in a single bound.

Look, up in the sky! It’s a bird! It’s a plane! It’s a Super Actuary!

When we consider other professions, there is little question that today is different than yesterday. We don’t hold their pasts against today’s capabilities. Yet, sometimes actuaries are judged on yesterday’s capabilities—either as individuals or as a profession—which is a fallacious appraisal.

Doctors, scientists and engineers do not dwell on the fact that their past theories and tools would be inadequate for today’s challenges. They fully expect yesterday’s ideas will yield to the ideas of today and tomorrow—that their domains perpetually evolve. We assert the actuarial profession is no different.

How is the perpetually-reinventing actuary created? The answer is quite simple: through lifelong learning, individually and collectively.

“Reinventing” is a popular buzzword in today’s business world. Companies must reinvent themselves continuously—products, operations, markets—or competitors will push forward and upward, leaving complacent and stagnant companies behind. Sometimes reinvention is forced upon an organization due to recent struggles.

SOA Vision

The Society of Actuaries’ (SOA’s) vision—“establishing actuaries as business leaders who measure and manage risk”—as stated in the 2013–2016 Strategy Map, is paraphrased as:

  • Developing actuaries as technical experts, business professionals and leaders.
  • Equipping actuaries and the organizations they serve to effectively measure and manage risk.
    • Enhancing their ability to address complex business problems.
  • Setting the global standard for a complete actuarial curriculum. Learning focused on technical excellence and business acumen.
    • Improving skills ranging from business leadership and communication to technical actuarial and analytical skills, as outlined in the SOA Competency Framework.
  • Strengthening existing and developing new opportunities with employers.
    • Enabling actuaries to find greater opportunity for career mobility and leadership positions.
    • Developing new relationships with employers in other sectors (such as commercial and investment banking).
  • Cultivating innovative and practical ideas.

Exams

Candidates often groan at the news of updates: The syllabus is changing or the exams are being restructured. The world, business, markets and technology—all are developing and evolving rapidly. Exams are changing constantly to stay in front of the curve. The SOA Curriculum and Exam Committee members are C-level (senior) officers, managers, consultants and others from a broad range of functions and disciplines. We don’t ask what junior actuaries need to be able to do in their current or near-future jobs; instead we ask what actuaries will need to know to succeed throughout their careers—not only in insurance, but in the risk management and predictive analytics spaces in any industry. Each track is undergoing reviews and updates; the ASA path is being redesigned.

Foundational career skill sets are developed in attaining our credentials—a first step in a long career path. Actuaries develop a solid foundation of business management fundamentals, and leadership, communication and strategic thinking skills help candidates grow and succeed in their careers. As actuaries progress in their career paths, the unique value of the actuarial toolkit in the risk evaluation and strategic decision-making arenas is honed and put to full use.

The number of actuarial science programs and students at universities has skyrocketed. The next generation is eager to learn what, how and why actuaries evolve into Super Actuaries.

Critical Thinking Skills and Business Acumen

Exams teach more than critical thinking skills and business acumen. The true value proposition for actuarial education is an actuary’s foundation regarding risk management approaches, concepts, business strategies, team processes, understanding key drivers, placing problems in a business context and communication styles that enable actuaries to:

  1. Apply these concepts to real world problems.
  2. Differentiate successful strategies from less successful strategies.
  3. Improve understanding of business and corporate environments.
  4. Formulate problems, develop strategic alternatives, select the “best” approach and decide on an implementation plan for the selected strategy.
  5. Think strategically regarding problem definition and anticipation of competitors’ reactions.
  6. Concisely and clearly communicate ideas to top management.
  7. Improve communication skills, including persuasion and thinking “on their feet.”

Continuous Learning

Imagine going to a hospital with technology stuck in the 1990s. Or seeing a doctor without current know-how, who stopped evolving with practices. Medicine, as practiced today, is not the same as it was 10 years ago. Technology has played a large role. The same is true of data—its collection, tools and analysis. Advances and practices not possible 10–15 years ago are being replaced with even newer methods. Similarly, technology and data have played a large role in shaping the actuarial profession. Our ability to understand and manage risks, solve business problems, and create business solutions never stops evolving. But increasing our abilities doesn’t just magically happen. Like preparing for exams, it requires considerable effort. Learning occurs through experience on the job, new opportunities, challenges, collaboration and (hopefully, not many) mistakes.

More Than Mere Technicians

X-ray technicians are experts at using the machine. With the help of other technicians, they deliver accurate and useful intelligence regarding the patient to the doctor. But a technician is limited in creating value or helping the patient. The doctor uses multiple tools and multiple sources of intelligence to interpret and diagnose the patient’s condition, consider alternatives, make recommendations, gain the patient’s acceptance and implement a solution. Patients in need of services go see the doctor, not the technician.

Actuaries’ roles should be analogous to the role of doctors. We are not mere technicians.

John Keegan’s stages of making intelligence useful are explored in “ERM, Lessons from WWII Codebreakers.”1 The five stages are:

  1. Acquisition
  2. Delivery
  3. Acceptance
  4. Interpretation
  5. Implementation

How do actuaries fare in this process of making intelligence useful? Exams help actuaries develop solid technical skills. How well do they help develop the ability to deliver intelligence and get it accepted by decision makers? Actuaries are well-positioned for a big data world. Data, technology and data tools have become BIG. There is more data—more “dots” to connect—and the data comes at everyone faster. But in this glut of data, someone still needs to think critically; look at the right data; and analyze, interpret and understand drivers to make the connections. The ability to connect the dots better than your competition creates value for your organization and its stakeholders.

Actuaries, among many things, have an affinity for solving problems and challenges—for developing solutions for businesses and society. As challenges become more complex, interconnected and move faster, actuaries have been at the forefront. Although risk and risk management have been around for millennia, the past decade has made all facets of business and government acutely aware of risk—and the value risk managers provide. As stated in the SOA’s vision, risk is at the heart of being an actuary. Coupled with technical fortitude, critical thinking skills and business acumen, the perpetually-reinventing actuary continues to create and add value.

Continuing Education

One aspect of continuous learning is continuing education. The profession has taken a proactive approach to educating actuaries in this rapidly evolving and competitive risk management environment. There are a staggering number of ways to keep abreast of changes in market trends, industry and demographic forces, regulations, technology and products.

Industry meetings, such as the SOA Annual Meeting & Exhibit, always have provided great opportunities for peer-to-peer discussions with many engaged participants who have broad perspectives. However, these sessions have evolved. Compare a meeting agenda from the early ’90s to today. The content, focus and delivery have changed: teaching sessions; workshops; “Ask the Experts;” longer sessions, such as the Chief Actuary Forums; buzz-groups; and many more. The Innovation Series is an example of a series of related sessions allowing wide, broad, and more substantive content and discussion.

There are boot camps and intensive one-day seminars on topics such as product pricing, risk management, reinsurance, business analytics and economic capital. Seminars often are based on meaningful case studies. Five years after adoption, the 2015 AG43 Seminar sold out and received high evaluations by participants. When’s the next one?

Online education is here, be it free Massive Open Online Courses (MOOCs) or commercialized offerings. There are scores of webinars that offer convenience and affordability, and they reach large audiences. There are e-Learning modules. Online offerings were once new, but today online continuing education is commonplace.

Our path to personal growth—and the path to take business leadership roles in any industry—is via developing stage four (interpretation) and stage five (implementation) skill sets. For example, being able to analyze ambiguous data and gain insights into the big picture by recognizing patterns or connecting the dots. And being able to manage change, collaborate, lead, prioritize and adapt using the right communication and management styles and methods. Soft skills can be studied, but there is no substitute for experience when honing skills. You are fortunate if you have a mentor or champion who provides development opportunities. More often than not, you have to make things happen—take on a new role, embrace change, etc.

One significant and effective means to grow is through volunteerism. I’ve been amazed at the rich discussions with colleagues from various industry committees and section councils over the past several years. Broad perspectives. Diverse work experiences. Subject matter experts. Much more than one could learn in isolation versus being engaged with fellow professionals. There also are enormous benefits derived from volunteering in any local nonprofit or activity that interests you. Early in your career, your company might not let you lead a project, but small organizations always need go-getters and achievers. What better way to learn managerial experience than by studying and doing?

The demand for continuing education is evidence that as individuals and as a profession, actuaries have embraced perpetual reinvention and the value organizations place on developing their actuarial leaders.

Conclusion

How is the perpetually-reinventing actuary created? The simple answer is through lifelong learning—individually and collectively. The ability to perpetually reinvent oneself takes planning and intentional effort. But in the actuarial profession, the perpetually-reinventing actuary has become the norm—not the exception. Which is the way Super Actuary becomes an everyday actuary in every industry.

Tim Cardinal, FSA, CERA, MAAA, is principal at Actuarial Compass in Cincinnati.