Tan Suee Chieh and Nick Spencer share the lessons of the Project New Horizon programme, which aims to prepare the profession for an increasingly complex future
How can we maintain our premier risk-profession status while addressing the growing complexity and interconnectedness of the risks we deal with? From March to June 2022, 22 senior actuaries and four non-actuaries considered this very question while completing the Project New Horizon programme. Participants came from diverse geographic backgrounds, and had interests in sustainability, systems thinking and pluralist economics. The project aimed to build a cohort of progressive actuarial leaders to shape the future during unprecedented and systemic uncertainties.
Over the next few months, the facilitators of the programme – Tan Suee Chieh, Nick Spencer, Nico Aspinall, Nick Silver and Lucy Saye – will share the skills and insights learnt, what they mean for the profession, actions to be taken and proposed next steps.
A trilogy of tragedies
The programme was inspired by Dr Anthony Hodgson’s July 2021 Thought Leadership lecture, in which he identified three tragedies that we, and all professionals, need to address:
- The tragedy of the commons – The escalating climate and environmental crises and challenges of intersecting complexities
- The tragedy of time horizons – Competing visions of the future colliding with near-term social and health (pandemic) crises
- The tragedy of consciousness – Developing responses to an ever-broadening array of economic and geopolitical aggravations, with the need to apply a broader mindset and awaken our collective human capacity to act.
Gaps in scale and speed
The IFoA and many of its members have been proactive in addressing these complex and uncertain issues. This has included our responses to the climate, pandemic and other planetary emergencies, and is a key element of our role as risk professionals advising on long-term sustainable solutions.
However, there are still gaps in how we address the scale of the challenge, and we are not progressing at the speed required. Project New Horizon started by creating a shared understanding of these gaps, and four core themes emerged:
- As risk managers, we only tend to act within existing client and regulatory frameworks, which often fail to incorporate broader systemic uncertainties. We need to be more involved in translating these risks into practical actions, and to take more ownership and responsibility. We are only just getting started on environmental risks, and we haven’t really started on social risks.
- We often rely too much on data, working compliantly to high accuracy within the current framework. This can mask the true uncertainties and underlying systemic risks. Can we better translate broader risks and uncertainties into practical actions? Can we take more ownership and responsibility for the outcomes, not just compliance?
- Within the next 15–30 years, and possibly sooner, artificial intelligence will outcompete us in terms of most of our compliance functions. If we are to be a relevant and attractive profession in 15 years, we will have to engage in holistic and long-term perspectives that harness artificial intelligence computation so that we are not replaced by it. The key to our future lies in the mastery of complexity and pluralism, developing coherent pathways, and helping arbitrate between different stakeholder interests.
- Individually and collectively, we lack urgency and incentives to change. Actuaries are, and have always been, in high demand. In this way, we have become victims of our own success. We need to challenge the system, speak up, and be more agile and entrepreneurial.
With these challenges in mind, we set out on our journey.
“Change can only be effective if we can enrol a group with a cohesive narrative and shared purpose that can inspire action”
Project New Horizon led us through a series of stages – developing our understanding, creating a new vision, developing practical actions to realise that vision, and using collaborative tools to build communality and energy to these goals. The three most important skills we learnt were:
- The three horizons approach (Figure 2) – This is an intellectual framework set around a long-term guiding vision of what is required. The approach starts with understanding the current predominant but unsustainable approach (H1). Then, having created an emergent long-term vision (H3), it considers H2 – the growing active transition between H1 and H3.
- An understanding of agency (Figure 3), which is implicit within the three-horizon model. Agency represents the ability to effect change. It is a distinctive change dimension, alongside future uncertainty. Plotting agency against uncertainty leads to four different analytical tools: forecasts, roadmaps, scenarios and pathways.
- New collaboration tools – One of today’s key challenges is that we live in a world of pluralism. People see problems differently and think of solutions at different levels and through different lenses. Change can only be effective if we can enrol a group with a cohesive narrative and shared purpose that can inspire action. We learnt new creative tools to help us collectively harness ideas and negotiate dilemmas. We also learnt a novel collaborative technique for listening to and engaging with different perspectives to propel collective action.
What these skills support – but is ultimately more powerful – is a mindset shift. We have been imbued with not only a clearer purpose and vision, but also a deeper sense of agency. An understanding of agency has taught us to be more comfortable with uncertainty. The future is not a given, but nor is it a statistical unknown; it is a space that we have agency over. Our agency is dependent on mindsets of courage, imagination and collaboration. You can only be a leader if you have followers.
The challenges, needs and urgency of the change required for our existing horizon grew bigger in each collective discussion, and have been the guiding lights in our development of future pathways of potential transformations.
In our next articles, we will outline the vision for actuaries that we developed, the skillsets needed to sustainably add value, how the profession can enter new domains, and institutional ways to accelerate our journey. The future is just about to start.
Tan Suee Chieh is a past president of the IFoA and was a member of IFoA Council from 2017-22
Nick Spencer is a past chair of the IFoA Sustainability Board and a sustainable investment adviser at Gordian Advice
Image credit | Getty