As a profession, we sometimes overlook the difference between actuarial science as a discipline and actuarial practices. The former refers to the collection of scientific theory and knowledge while the latter focuses on the application of knowledge acquired from the discipline. While this field of study is largely driven by the advancements within the various areas of practice, it is also important that our practices are grounded in rigorous theoretical foundations that provide fertile ground for new innovations and discoveries.
Why Is It Important to Support Actuarial Scientists?
Actuarial scientists have unique roles to play in the growth of the profession. While practitioners are at the forefront of business development, actuarial scientists observe evolving industry needs and develop scientific methodologies to address the unresolved technical issues arising from industry practices.
One of the greatest success stories was the creation of credibility theory in actuarial science in the 1980s. The concept of credibility was developed and practiced by American actuaries with intuitive formulas by the 1960s, but it was not until the 1980s when the European school of actuarial scholars discovered the statistical underpinnings of credibility theory. This led to the flourishing of statistical analysis—not just by actuaries, but also by statisticians and mathematicians—on credibility that continues to this day. Many of the textbook formulas we teach today, such as the Buhlmann-Straub credibility estimator, have been widely practiced by actuaries around the world. They are perfect examples of how actuarial theory was driven by practice and feeds back to the advancement of new practices.
During the building of skyscrapers, the height of the building above ground depends on the depth and the strength of the foundation underneath the ground. Likewise, our profession will be successful over time if we can build a solid foundation of actuarial science. This is especially important as we reach a new crossroad with the rapidly changing landscape of data science. We need to support actuarial scientists who understand practices and push the boundary of actuarial knowledge. The future of the profession is not as simple as making every actuary a data scientist. Rather, we need new theoretical foundations and practical applications that grow out of the interdisciplinary studies of data science and traditional actuarial science.
While the industry tends to focus on research and development (R&D) efforts with immediate applications, it is also critical that we support research that has a long-term impact. We should not be short-sighted to judge the value of research by its immediate applicability in the industry. Otherwise, we miss opportunities for breakthroughs and discoveries that come only after a long sequence of small steps in theoretical development. Many groundbreaking theories do not see real-life applications until decades later. When the long-term research comes to fruition, it may not only address particular industry problems, but also open doors for actuaries in new areas of practice or equip them with transformational technologies. As a profession that prides itself on long-term asset and liability management, actuaries should have the wisdom to support not only down-to-earth practical research, but also blue-sky theoretical research that may define new directions of actuarial science.
Vision for Early Career Award
A scientific discipline cannot prosper without world-class researchers and thought leaders. As a small and applied discipline, actuarial science has had challenges attracting scholars and educators. On one end of the funding spectrum, foundational sciences, such as mathematics and statistics, are traditionally supported by federal agencies, such as the National Science Foundation. On the other side, applied sciences, such as computer science and engineering, attract a wide range of industries to provide funding for technology development. Actuarial science is between fundamental science and technology development, and it often lacks funding support. Therefore, it is fundamental for the community and the profession to provide mechanisms and incentives to attract and retain top-notch talent to work in this field.
An early career award is a common practice in many scientific disciplines. It recognizes individuals for exceptional contributions at the early stages of their academic careers, is often considered one of the most significant achievements for young scholars and can be a decisive factor for tenure or promotion. Early career award programs set examples of excellent research in scientific disciplines. While our colleagues in mainstream disciplines can apply for early career awards from national organizations, academic actuaries typically are not supported. This means we may lose talented young scholars in the field when they seek recognition and funding support by shifting their focus to other disciplines.
We strongly believe the creation of an early career award is an important step to raise awareness of actuarial science as a scientific discipline. It is a recognition of excellent research by young scholars and future academic leaders. We hope to see increased scholarship in actuarial science from a friendly competition among high-caliber scholars. We also hope to shine a spotlight on actuarial scientists—a small but important fraction of our actuarial profession and community.
Winner of the 2021 Award
This year marks the launch of the first international early career award in actuarial science sponsored by the Society of Actuaries (SOA). The Education and Research (E&R) Section Council is proud to champion the creation of this award program with staunch support from the SOA leadership. To ensure impartiality and high standards, the selection was conducted by an independent committee of the world’s leading actuarial scholars and leaders from the industry. The award program is open to all countries. Considerations have been given to candidates’ research track records, collaboration with academics and practitioners, and the potential impact of their research work on theoretical or practical aspects of actuarial science. The E&R Section Council reviewed the committee’s recommendation only to ensure the process had been carried out properly and in fairness to all applicants.
This year’s program received a large pool of excellent candidates, and the winner is Dr. Ruodu Wang from the University of Waterloo. Dr. Wang received a B.S. in mathematics (2006) and an M.S. in financial mathematics (2009) from Peking University in China and a Ph.D. in mathematics (2012) from the Georgia Institute of Technology. He is currently a university research chair and associate professor of actuarial science in the department of statistics and actuarial science at the University of Waterloo. At less than 10 years post-terminal degree, Dr. Wang already has established himself as a leading figure in actuarial science research. He has published nearly 70 scholarly papers in various areas of quantitative risk management.
Dr. Wang’s research has bridged the connections between actuarial science and many other fields, such as financial mathematics, operations research, probability and statistics. He is the co-editor of two reputable actuarial science journals: ASTIN-Bulletin and European Actuarial Journal. He has been invited as a keynote speaker for several major academic conferences in actuarial science, including this year’s virtual Actuarial Research Conference. Dr. Wang also has already established himself as a leading scholar in solvency-related issues with impact on the banking and insurance industry in Europe, especially on Basel III and Solvency II regulations.
We are encouraged by the success of this year’s early career award program, and we hope more people in the actuarial community spread the word and encourage young scholars to build their careers in actuarial science. We urge all applicants to keep up the outstanding work they are doing and to apply for this award again in the future.
Last but not least, we want to extend our deepest gratitude to SOA staff members Jane Lesch and Stuart Klugman, FSA, CERA, for their extraordinary support of the program; the SOA leadership led by President Roy Goldman, Ph.D., FSA, MAAA, CERA, for their recognition of the value of the program and generous funding support; and the members of the early career award selection committee for their tireless work reviewing and recommending decisions. Of course, the program would not succeed without the tremendous investment of time and effort from all members of the E&R Section Council.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.
Copyright © 2021 by the Society of Actuaries, Schaumburg, Illinois.