Cintia Cheong caught up with Joshua Waters to find out more about his journey towards CERA success.
The Chartered Enterprise Risk Actuary (CERA) qualification is designed to help actuaries demonstrate a better understanding of enterprise risk management (ERM) techniques and issues.
Members of the IFoA can obtain the qualification if they become a Fellow and have passed ST9, one of the specialist technical (ST) subjects in the IFoA's professional exams, or as an additional ST subject following Fellowship.
They also need to attend a CERA seminar, which enables students to investigate and discuss more practical applications on ERM.
Joshua Waters is among those who have successfully achieved a CERA. After gaining a Masters in Mathematics at the University of Cambridge, he began his career as an annuity pricing analyst at Partnership, where he also studied for the Certificate in Quantitative Finance (CQF).
Waters is now actuarial executive life advisor at KPMG where he liaises with senior figures on a regular basis. He is currently studying for the chartered financial analyst (CFA) level 2 exam.
What does your current role involve?
My role at KPMG is varied. I present at conferences and to clients, and that's what I'm doing today in Edinburgh, presenting to a client on credit risk.
I'm currently working with a C-suite individual and advising them on credit risk governance. It's fascinating to be able to speak to people and find out the views of the industry on cutting edge topics and then put these into practice.
Can you tell us about your career to date?
After I graduated from Cambridge, Partnership hired me to help price their annuities. That was my first job. In my first week I was minuting the pricing strategy meeting with the CEO of Partnership, Steve Groves. I was very fortunate to be in regular meetings with him.
I persuaded my manager to let me build a long-term care pricing model to monitor our profits, based on what I was learning from one of the early courses. I think it taught me the value of these exams, and the extent to which you can put what you have learnt into practice. That's stayed with me in terms of CERA, ST9 and beyond.
I moved to market risk a couple of years into my career at Partnership and it was a very good fit for me - allowing me to work on risk calibration and alternative assets. Some of the things I talk to clients about today started when I moved into market risk in 2011. Back then, the clients were the actuarial function holder (AFH) and the chief investment officer (CIO), so I had high visibility and I worked on challenging problems and came back to present proposed solutions to the AFH and the CIO. It was very rewarding.
I would have to defend my work to them. I was challenged by them and would defend my proposal. Often this was successful and often they would have some deep insight that would change my perception of the problem. I was very lucky to work with such incredibly talented people.
I very much enjoyed developing trust and building relationships with the senior executives at Partnership. At KPMG I am replicating my success at Partnership and building the same reputation at a C-suite level across multiple insurers and asset managers.
What was your route to becoming CERA? Did you take ST9 as one of your ST's required for qualification as a Fellow of the Institute and Faculty of Actuaries?
Yes that was my route - I think it's a very efficient way to go about it. I was drawn to the ST9 material, which is cutting edge. It's ahead of its time and is regularly updated so continues to be. A lot of the risk calibration questions that I grappled with in the run up to Solvency II are in the ST9 course.
What attracted you to doing the CERA qualification in the first place?
In terms of the content, it seems to be the most transferable. A lot of the STs are geared towards general insurance, pricing, etc. They are very specific, whereas you can apply enterprise risk management to the oil industry, climate change, your own personal life, anything.
I think the content is versatile and useful for anyone. It's also very mathematical which I found interesting. One of the most mathematical theories in CERA is the copulas. I've been lucky to be able to contribute to the Life Aggregation and Simulation Techniques working party and I helped to present some of our results on copulas in Bristol.
Having achieved the CERA qualification, how do you think it will help you with your day-to-day work?
In my current project advising a chief risk officer on credit risk governance, I draw on my knowledge of corporate governance from CERA. As well as the mathematical theories, CERA has real grounded practical insights into governance. The holistic approach championed in CERA has also driven my approach to stakeholder management - ensuring that I bring stakeholders along the journey.
How commonplace do you expect CERA to be in the future?
I think obviously you have no idea what the insurance industry will look like 30 years from now. I imagine ST9 would have the most longevity of all the STs. Whatever happens in the world, the CERA qualification will prepare you for it. ERM is a framework you can apply to many roles and situations. It's extremely useful. You'd imagine that will be relevant long into the future, whatever the industry looks like 30 years from now. I imagine people doing CERA will be highly valued.
What would you say to others considering the CERA route?
I have advised lots of people to do CERA. My advice on CERA and studying for ST9 wouldn't be any different from my advice on CA1 (Core Applications in Actuarial Risk Management). If anyone has passed CA1 and is studying for ST9, I would say that whatever approach they took for CA1 is probably the right one for ST9.
Obviously CERA is difficult for people, with people facing big demands from the office, from study and from family and friends. It's challenging for actuarial students.
Where do you see yourself in 5 to 10 years time?
It is difficult to predict that far ahead. I hope to be being intellectually challenged doing something that has a high degree of influence on real business decisions.
I'm still hedging my bets about where I want to go in terms of risk and investments. I am focusing a lot on investment risk but I'm not sure whether to veer more to the investment side or more to the risk side. At the moment I'm studying the CFA level 2 exam. CERA is risk-focused, CFA is investment-focused, and CQF is modelling-focused.
The big advantage of CERA is it gives you an extra string to your bow. This differentiates you and allows you to see the bigger picture but from a different angle.