Talking ’Bout a Revolution

Actuaries and IT teams collaborate for effective change

 Jyotsna Sankuratri and Kelly Hennigan February/March 2019

The insurance industry is experiencing a FinTech/InsurTech revolution, causing disruptions in the day-to-day operations of the actuarial and finance disciplines. Companies are being challenged to become more digital and data-centric. As a result, organizations are making significant investments in more efficient and modern tools to enable advanced data and analytics capabilities. This rapid evolution in technology and its associated implementation can be extremely complicated and exhausting to keep pace with—requiring actuaries and information technology (IT) teams to work together now more than ever. In an IBM study, more than 1,500 CEOs identified their No. 1 concern as the growing complexity of their environments, and the majority of those CEOs stated that their firms were not equipped to cope with the complexity.1

Many have heard the horror stories of actuarial transformation efforts that have gone awry due to a company’s rudimentary (or complete lack of) data practices. Unfortunately, many organizations are not data-centric. Some companies may not have a data cataloging mechanism or data dictionary—a tool or process that includes detailed information on business data elements such as definitions, usage, allowable values, format and relationships to other data—which is a critical component in enabling effective communication across business and technical teams. PwC’s 2018 Actuarial Modernization Survey across more than 50 life and property and casualty companies found that fewer than half of responding firms had a data strategy, data dictionary or robust data management in place.2 Actuaries have been forced into a vicious cycle of sourcing data from multiple administrative platforms, discovering information is missing and thus being unable to reconcile the data in a timely fashion. This leads to a general lack of confidence in the results and recommendations produced. Actuarial talent is often consumed with activities like data preparation, quality checks and reconciliation, leaving limited time for analysis. What’s more, timely insights are being ignored or rendered unusable due to the aging of or lack of conviction in foundational data.

Speaking the Same Language

A solid team dynamic between business and information technology (IT) professionals is not formed overnight. We discovered this at Voya throughout our Actuarial Transformation project, as we built out our data dictionary. As actuaries, we use acronyms like CSV for cash surrender value and MGIR for minimum guaranteed interest rate more often than kids text LOL (laugh out loud) or YOLO (you only live once). We quickly discovered that other professionals, like IT, did not speak the same language. …

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Working Together to Navigate Change

With data becoming a prime target for automation, business and technology departments are finding they must come together to evoke long-term behaviors to ensure successful partnering on solutions. As stated by Dustin Verzal in the Society of Actuaries (SOA) Actuary of the Future Section’s May 2018 newsletter: “Although data science and actuarial science are technically two different fields, they are not mutually exclusive. Both sides can benefit from collaboration and cross-training in each other’s discipline.”3

However, this partnership across data science and actuarial science can be particularly daunting for these professions, as individuals across both fields are very capable of independently managing data-related activities, such as parsing together disparate data sources, transforming data into consistent and usable formats, writing macros and demonstrating a heavy reliance upon the wizardry of Excel.

According to SunGard, 60 percent of insurance organizations noted that improved automation of data feeds and enhanced reporting were key improvement areas in 2018.

Change can be difficult and resisted for a variety of reasons and emotions, such as feelings of losing control; unknowns and uncertainties; the memories, skepticism and resentments associated with past change efforts that did not go as planned; and perhaps, most influential, the fact that change oftentimes equates to more work! In a 2013 Katzenbach Center survey of more than 2,200 executives, managers and employees, 65 percent of respondents stated they experienced some form of “change fatigue,” a dynamic that occurs when employees feel they are being asked to make too many changes.

People will only be successful in overcoming complexities when they are empowered to navigate through change. With technology vendor selection efforts, project management status updates and implementation deadlines to manage, organizations can quickly lose sight of the fact that underlying the applications, infrastructure and vast amounts of data are people. Mercer’s 2018 Global Talent Trends Study stated: “Technology in the workplace will maximize its impact only when paired with human judgment … technology brings us into the human, connected age of working.”4

As the technology revolution continues, actuaries should challenge IT colleagues to provide advanced self-service tools and capabilities that simplify their day-to-day work. This will allow them to focus on improved analytical insights and advanced reporting for the business. According to SunGard, 60 percent of insurance organizations noted that improved automation of data feeds and enhanced reporting were key improvement areas in 2018.5 By enhancing data and reporting, actuaries will continue to stay relevant, develop skills and deliver value while also challenging their employers on inefficient, status quo processes. However, IT needs to counterbalance these business requests if actuaries place too much focus on disparate solutions that are “best in breed” on a capability-by-capability basis. For example, if an actuarial department is in need of a data visualization tool, emphasis should not be placed on securing a specific tool offered by a particular vendor. Instead, a tool offering the necessary data visualization capabilities that could be leveraged across the broader organization and optimally weaved into the strategic technology platform should be contemplated. In these situations, the IT department is accountable for providing the oversight and perspective on corporatewide integration of modern solutions to strive for architectural and organizational simplicity.

It is essential for leaders to foster an environment of collaboration, maintaining a symbiotic relationship across actuaries and their IT counterparts. Actuaries are known for their analytical mindsets and “why” mentality—both of which contribute to building a strong partnership with technology departments that may not have the full business perspective. Conversely, IT professionals are known for their broader view of organizational infrastructure, programs, applications, software, project impacts on multidisciplinary teams, and the realities associated with implementation of data management strategies and new applications. Therefore, if actuaries outline the requirements, IT teams can propose solutions that meet these needs while also staying on course with the company’s technology roadmap.

Network Leadership

With advances in technology and the rise of social media platforms, there are constant reminders of the power that comes from having a strong network. Network leadership is the concept that organizations can become more effective by creating teams of people across different departments, functional disciplines and even site locations to respond to business challenges. These multidisciplinary groups, of which both actuaries and information technology (IT) personnel are critical, are empowered to make decisions. While organizations traditionally have relied upon a single role within reporting structures for the most effective way of decision-making, network leadership puts the accountability in the hands of a group as a shared responsibility.

The Monitor Institute characterizes network leadership as collective, facilitative, emergent, relational, connected and a bottoms-up approach; conversely, organizational leadership is regarded as individual, authoritative, controlling, directive, transactional and a top-down approach.1

Network leadership relies on the creation of quality relationships built over time and an established environment of trust—which allow for a communal culture. This approach enables the team to clarify direction, establish alignment and garner commitment from a variety of stakeholders as broader understanding and buy-in is established. As the collective evolves, where each individual falls on the organizational hierarchy becomes irrelevant, blurring the distinction between leader and follower. Depending on circumstances, all individuals will be both leaders and followers at different times as various issues are brought forth for resolution. Actuarial and IT departments, along with other functional areas, play a critical role in network leadership—particularly as companies continue to evolve and manage through technological change. Mila N. Baker, author of Peer to Peer Leadership, eloquently summarized a network community as follows: “Everyone is involved in creating and working toward that same common purpose and vision … everyone is equal and all are able to act.”

Reference
¹ Grant, Heather McLeod, Diana Scearce, and Noah Flower. Social Networks for Social Change. Monitor Institute, January 30, 2010: Slide 74, (accessed December 7, 2018).

Leading the Way

Leaders across the company must exemplify change management best practices and become change ambassadors. They must exhibit behaviors that challenge outdated and archaic processes. In many cases, organizations must disband old processes completely and avoid forcing them into new technologies to optimize the full potential of the new capabilities deployed. Inciting employees to get on board with developing technologies will further reinforce the acceptance of the new applications, capabilities, processes and skills.

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To learn more about Network Leadership, refer to “What is Network Leadership?” by Curtis Ogden.

Critical components of change management include both organizational leadership and personal aspects. When employees are inspired to learn new behaviors and energized by those around them, they will be able to better support the evolution of their organization’s goals. Leaders must explain personal aspects of change management—for example, how change will impact an individual’s role and responsibilities, how current competencies will be applied in the new environment, and what type of additional training and development (if any) are necessary to shepherd individuals through change. When leadership creates an environment where historical experience is partnered with fresh perspective, employees are emboldened to subtly challenge—and change—outdated behaviors.

Change at the Individual Level

In addition to leadership support for change management, it is critical for individuals to propel themselves forward. Actuaries must be receptive to refreshing their skill sets to align with the rapidly shifting environment. A study performed by McKinsey Global Institute across Western European insurers found that as much as 25 percent of full-time positions in the insurance industry may be consolidated or replaced between 2015–2025—the majority of which are operational in nature and due to automation.6 As such, those in the actuarial profession must have the willingness—and confidence in themselves—to develop the competencies to acclimate to the new realities of work. Employees must believe in their own capabilities or have the desire to better their skill set in order to keep up with the rapid pace of change. While an Accenture survey cited 57 percent of workers as having a high estimation of their own skill set as well as a high willingness to work with intelligent technologies, the remaining 43 percent did not.7 Leadership support to address this gap through continuous learning and encouragement is necessary.

Optimal organizational impact can be achieved by blending technology with the human element. Embracing network leadership can foster the spirit of partnership and change management, wherein companies benefit from community-driven decision-making. A partnership across actuarial functions, business and IT is essential in establishing a shared vision of the future state—particularly around data management and the overall data strategy. Similarly, cross-discipline decision-makers must be willing to commit to this vision to minimize resulting disruptions on their teams, while concurrently supporting the future path. By uniting across IT and actuarial disciplines, organizations will be better positioned to successfully navigate through the rapidly changing environment and effectuate transformation. As Argentinian revolutionary Ernesto “Che” Guevara said, “Remember that the revolution is what is important, and each one of us, alone, is worth nothing.”

Jyotsna Sankuratri, M.D., is IT director, head of Financial Risk applications, at Voya Financial. She partners with actuaries across various lines of business on data and technology initiatives.
Kelly Hennigan, FSA, CFA, is vice president, head of Investment Operations, at Venerable. She is currently a contributing editor for The Actuary magazine.

Copyright © 2019 by the Society of Actuaries, Chicago, Illinois.