In the last part of our series on the IFoA’s programme addressing the future of the profession, Tan Suee Chieh, Nico Aspinall and Lucy Saye lay out its conclusions – and the part you can play
Project New Horizon members started with the question: “How can we maintain our premier risk-profession status and address the growing complexity and interconnectedness of the risks we deal with?” To find some answers, 22 senior actuaries and four non-actuaries deliberated over three months last year.
We thought about actuaries’ skillsets and domains, and how we can create a more agile, responsive profession. Here, we sketch out our vision and gameplan.
Far from restricting ourselves to financial services, actuaries should be making a wider contribution. The interconnectedness and scale of human activity means that the range of risks we face, and the speed at which they might affect us, is increasing. Globally, the economic paradigm is transitioning from NICE (non-inflationary continuous expansion) to VUCA (volatile, uncertain, complex and ambiguous).
In this complex future, our role as actuaries will involve working with a broad array of experts. As a result, we can explore the implications of future scenarios, be guided by our professionalism and ethics, and help develop the consensus on the kind of society we want to build.
In the language of Project New Horizon, we want to move from being a ‘first-horizon’ (H1) profession into a ‘third-horizon’ (H3) profession.
H1 represents the way things are done now – ‘business as usual’. It is a repeatable, efficient machine that can deal with the circumstances it has been designed for.
We believe H1 is a declining pattern – that the machine is losing its fit with emerging conditions, its environment and inputs.
The starting point of an H3 conversation is recognising the challenges faced by H1.
H3 is an emerging future pattern that will be the long-term successor to H1. To us, H3 represents a fairer and more sustainable future, taking the place of our trajectory towards an unsustainable world that is shaken by repeated and overlapping crises.
H2 is the middle ground in which organisations push towards innovation without entirely losing their ability to deal with the present day. The Project New Horizon group believes that actuaries as risk professionals, with our skillsets, public purpose and history of dealing with uncertainty, can play a significant role in supporting this transition.
As we hope you will agree, achieving our vision will require the transformation both of our skillsets and the domains in which we apply them. However, effecting this level of wholesale change will require cultural and institutional shift at the IFoA and across the profession. We need to become an H2+ organisation – one that actively innovates and moves fast.
What’s the problem?
For many members – probably the majority – this might be a baffling conclusion. What needs changing at the IFoA?
There have been many changes to celebrate in recent times; from online exams to free webinars and the arrival of digital communities, the IFoA is making progress on several fronts. However, these are incremental relative to the changes needed to become an H2+ organisation.
As a motivating example, consider defined benefit (DB) pensions. Following the liability-driven investment crisis last year, we saw that DB pension schemes at the industry level are closer to the end game than many could have imagined.
DB actuaries in the UK, and many finance and investment actuaries, will see the loss of their core client base go from being a problem that is five to 10 years away, to being a problem that will hit during the next couple of years. These actuaries represent around 25% of IFoA Fellows, and they should be motivated to explore their futures with the IFoA.
And they are not alone. Actuaries in wider fields, still figuring out how the profession can help them, should be motivated. Actuaries outside the UK, who want to see more vibrant communities, should be motivated. With the future of our careers and society on the line, all of us should be motivated.
What you can do
1 Think about who you are
As a community, actuaries need to learn about and understand the challenges and opportunities around us. We are not separate from our society and environment. Concretely, you can start today by evolving your beliefs about who you are as an actuary and adopting a larger sense of purpose. This may involve adopting processes and habits that will support your journey, while the more experienced actuary can coach others, plant the seeds of change and set specific aims to help them grow.
2 See threats as opportunities
The changing demands of our traditional life and pensions domains, the increasing use of artificial intelligence and machine learning, and the automation of compliance could be seen as threats, but we must look at them as opportunities. We can work anywhere with data, as well as meeting the need for modelling sustainable solutions and applying judgment and ethics.
At its heart, actuarial work is multidisciplinary, blending economics, finance, maths, anthropology and systems thinking. We can break free from technical silos and work across multiple disciplines. Actuaries are courageous and speak truth to power; we are curious, adaptable and imaginative. The actuaries of the future will engage boldly with internal and external stakeholders and help to change the world.
3 Adopt a growth mindset
To do this, we need to adopt a lifelong learning and growth mindset, and we must innovate, experiment and challenge our institutions to think systemically. We can help others do this using our networks, both within and outside of the profession. This will help us to explore work in non-traditional areas – for consultancies, this may mean reaching atypical clients; for insurance companies, it may mean working with other functions.
4 Champion change
We can campaign and advocate for change both inside and outside of our organisations. For consultants, this may mean being bold and demonstrating our value to different clients or industries.
For in-house insurance actuaries, it is having the courage to step into different teams or roles and embrace more senior and strategic positions, carving a path and creating role models for those who follow. Outside of the profession, it may be volunteering for wider causes within the community and contributing to society in a positive way.
5 Put yourself forward
The IFoA is a democratic institution that elects its Council members. If you believe in the need for the changes we describe, stand for election, or make sure you vote at the next one and look for candidates who ‘get it’.
What does ‘getting it’ mean in terms of the three horizons?
- The realisation that we need a forward-looking profession, supported by an agile IFoA, to address a world afflicted by greater crises and uncertainties
- The recognition that the solution is a more radical programme, supported by an institution designed around that execution
- The need for, and experience of, a culture of transformation
- The courage not only to believe all this, but say it out loud, too.
Pay attention in the next election. Be a candidate, or if you see the candidates who embody these attributes, vote for them.
Building better support
In our previous article (December issue), ‘Project New Horizon: A reform mindset’ (bit.ly/PNH_reform_mindset), three IFoA Council members shared their realisation: at present, the IFoA over-governs, slows decisions down while issues pass from quarterly committee to quarterly committee, and loses sight of the strategic vision that started actions in the first place.
Our responses have been incremental, reflecting the need to gain consensus across various committees, and are perceived as slow. This behaviour is a typical H1 systemic response, as the organisation is still anchored in the need for stability and continuity. We believe we can be more imaginative, confident and agile in unleashing our full potential.
Many are frustrated by the pace of change. A theme throughout recent presidential addresses has been the need for agility and transformation – but presidents run into the same obstacles and, in their repeated calls for more agility, we can see that they have found such change impossible to deliver
Given our organisational structure, this is no surprise. We maintain a Council of 30 members with no sense as to what the right number might be. Is 30 too many?
Too few? Do we have a clear vision of Council’s purpose? Despite branding ourselves a global profession, we give a fixed proportion of seats to the Scottish Board; that may have been reflective of the profession at the turn of the millennium, but hardly represents the profession as it is today. We only provide presidents with a one-year term, making the ability to effect radical, long-term change all but impossible, despite their annual exhortations.
To some, radical Councils and presidents represent threats to the IFoA – but the real existential threat to the profession is the lack of adjustment to a rapidly, and radically, changing environment. Like the proverbial frog in boiling water, we will not escape if we do not take the leap.
Tan Suee Chieh is a past president of the IFoA (2020–21)
Nico Aspinall is an independent consultant and deputy chair of the IFoA Finance and Investment Board
Lucy Saye is a manager at Deloitte and chair of the IFoA sustainability board
Image credit | Getty