Open-access content Thursday 23rd August 2012
Climate changes influence on actuarial disciplines can help us to understand risk, suggests Philip Scott
As I write, we are just emerging from an extremely wet summer. It has been depressing for most of us to live through. But for others, extreme weather conditions can have devastating consequences - in damaged crops, floods and disrupted businesses.
Climate change affects all our lives, and the member interest group for environmental issues has been gathering strength and is one of the largest in the Profession. There is now a resource and environmental panel reporting to the management board to develop strategy in this area. The panel has involved people from other international groups with similar interests and those outside the Profession, such as Professor Sir Brian Hoskins from Imperial College, who recently lectured at Staple Inn Hall on the challenge of climate change.
As actuaries, we need to consider the influences that climate change has on actuarial disciplines, and where the Profession can help to understand the risks posed.
Risk management is a new element of strategy that the Profession is proposing to develop this year. As businesses and organisations redevelop their approach to risk - limiting downside risk while making the most of upside potential, actuaries are ideally placed to consult on the optimum strategies. Risk management is one of the growth areas of business, and actuaries - who are skilled in insurance, investment and pensions - can contribute much. We need to demonstrate to the public that our skill sets can add value to senior positions in risk management.
To meet this challenge, the Actuarial Profession appointed a risk working group in 2011 to develop and oversee implementation of a strategy to help members develop careers in wider risk management. The group has identified three key areas to build upon:
l Education and training: We have played a key part in developing internationally accredited risk management qualifications in the Chartered Enterprise Risk Analyst (CERA) and the ST9 examination module. In addition, we shall continue to provide opportunities for actuaries to develop risk-management skills through continuing professional development learning, work opportunities and events such as the Risk and Investment Conference.
l Sharing knowledge: We shall support members through enabling them to share and experience the knowledge of senior professionals already in key positions in risk management. By taking a fresh approach to areas such as risk modelling and risk analysis, we can challenge existing assumptions and decision processes.
l Branding: We shall develop the actuarial brand so that employers, policymakers, regulators and students see actuaries as credible risk managers and business leaders. Where actuaries are already established in core roles, we can use their influence to raise our profile.
Much of the success of this initiative will be down to the hard work and ambition of individual members, who can spot opportunities to use their core actuarial skills to branch out into the emerging area of risk management.
Besides the weather, the other news story still prominent in the headlines is public confidence in the banking sector. As a non-executive director of one of the major banks, it is a matter close to my heart. Under the glare of the media, banking and financial institutions have to account for their actions to Parliament, their shareholders and the general public. What I fear is that all those who work in banking are tarred with the same brush. This would be wrong - most bank employees are good people doing a worthwhile job. It is a shame that such organisations are let down by the actions of a few.
As actuaries, our training and experience give us a good understanding of how to analyse the past to see where faults may have occurred. We can then work on preventing any recurrence, and rebuild confidence in these institutions. It is a mark of our profession that we can stand up for the public interest, and assist in finding a better path for the future.
Beyond banking, there are many other businesses where we should ask: "Can we usefully apply our skills to help out?" For example, returning to my original theme, climate change is an area that has captured the imagination of the profession. We are comfortable with assimilating complexity - bringing together demographic influences, finance and economics - and projecting it into the future.
If we can see a way in which to harness this interest and spot opportunities for actuaries to contribute, then we should push forward with energy into these new disciplines.
I really agree on the president comment.As i aim to be an actuarist the climate has been one of the threat in our countries.hope the actuaries are able to predict what should happen in future.
Stanley Kioki, Actuarial student