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The Actuary The magazine of the Institute & Faculty of Actuaries
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President’s address: Quality values

It was a pleasure and privilege to be in the company of many former presidents of the Institute and the Faculty recently. The value and relevance of their experience and wise counsel transcended the passage of time.

During our discussions the question was asked: “What is it that distinguishes the skills which actuaries bring to modern business life?” It seems to me that answering that question is fundamental to ensuring that our profession continues to play a highly valued role in business life both now and in the future.

Actuaries have regularly been at the forefront of new developments in finance: the analysis and consequent understanding of mortality data; the techniques to solve financial problems involving several different variables; the use of compound interest and discount rates.

While we continue to be among the leaders in developing techniques such as stochastic modelling, it is not, in my view, our tools and techniques which distinguish us but rather what we do with them. For many years insurance companies and pension funds were highly regulated and the benefits which policyholders and scheme members received contained significant discretionary elements. Actuaries, with their rare skills and strong professional ethos, became trusted pilots. It was to the actuary that boards and trustees looked to apply their skills to navigate the difficult course among the swirling currents of prudence, fairness and commercial viability.

Today the discretionary element is much less and regulators have typically been given most of the responsibility for setting the ‘correct’ course. Whether that has made the financial world a better or safer place is open to debate — but it is the current reality.

What then are the distinctive qualities and skills that actuaries bring in today’s world? Here are a few personal thoughts.

Long-term thinking: We are trained to think beyond the here and now. We can provide a counter balance to those whose measure of success focuses little further than next year’s profit and loss account.

Understanding data: We are an evidenced-based profession. We understand both the power and limitations of data.

Understanding models: Again we understand both the power and limitations of models, that their real value is in informing decisions not in making decisions.

Multi-dimensional thinking: We are trained to think about the interactions of different factors, to see the bigger picture and, in consequence, to be able to better assess the full range of future outcomes.

Problem solving: We typically love problem solving. We are curious to find out what lies at the heart of the problem, energetic and resourceful to find solutions. Look at how the profession has transformed general insurance in less than two generations.

Professional backbone: Bolstered by our code and by an innate sense of public interest we are prepared to speak up when we feel it necessary. This list is by no means complete and I would be interested to hear from you what distinctive qualities you believe we bring to modern business life. None of the qualities listed above is unique to our profession but the combination is, in my view, very rare and something of which we should be proud.

We will keep our skills and techniques moving forward (CERA is a positive recent example). However, in a world where knowledge transfers easily and globally we will rarely (and only briefly) have unique tools. It is how we apply them which will continue to set us apart. We must continue to develop our reputation for communication and business awareness so that our advice is delivered in the current context.

We can learn much from our predecessors. We must apply ourselves to our challenges today as diligently as they did to theirs. If we do so and hold fast to our attributes we will enhance our great profession’s reputation and, in so doing, make the financial world a safer place.