Actuaries taking familiar paths through wider fields
Railing against complacency
I'm an actuary who rather lost faith in the profession the more I discovered how much we didn't know about risk and the more I realised how far we'd let other professionals secure the centre ground.
The assessment of bids for the West Coast Main Line rail franchise is a good example from this centre ground.
Information on what went wrong is sparse, but there seems to be a problem with risk assessment allowing for inflation.
Nobody, as far as I am aware, considered actuaries to be the natural group to review the bids before they went out, or - more high profile- to report on the problems after the event.
But, at a time when the profession is trying hard to raise its game in all aspects of risk, I'm pretty sure any actuary worth their salt would have avoided the errors that seem to have been perpetrated,
The problem is that we still lack status and acceptance as risk professionals and we aren't, as we aspire to be, the natural choice to carry out such reviews.
We must continue to challenge ourselves by asking how far we have travelled down the road to acceptance, where the end of the road is defined as a position where Richard Branson or First Group or the government calls us in as a matter of routine.
Richard Chapman 29 October
No saving grace for our Ageing Society
I attended the Actuarial Profession's and the International Longevity Centre-UK's joint debate, 'The Cost of our Ageing Society', on 16 October and am sorry to say that I was disappointed with almost all the contributions, although I was unable to stay to hear the final speaker, Colin Redman.
In particular, I find the idea of concentrating on support and dependency ratios, which was common to all the speakers I heard, to be a totally flawed approach. It assumes that all people not working need 'supporting', irrespective of the amount of their capital, whether inherited or saved. It is an insult to ignore the significant savings of many people during their lifetime (via career success) and to assign them as 'people who need support'.
Did the speakers forget about savings entirely? If so, it was either naïvety on their part or an admission that actuaries, of all people, don't understand the benefits of saving - ie, that the process helps not only the savers but also everybody else via the resulting new capital and hence greater output.
The widespread use of an assumption of support or dependency based only on age is poor and will lead to wrong decisions. Actuaries should be leaders in this field, yet they seem to be either as wrong-headed as all the other vested interests at large, or simply staying out of the debate. Either way, is this really what actuaries want?
Terry Arthur 27 October
Step up to the mark or step aside
I enjoyed reading your Editorial article in the November issue of The Actuary (p5). Actuaries need to demonstrate their expertise in wider fields, and I heartily endorse moves into new areas.
You mention investment as a traditional field for actuaries; numerical analyses, models, stochastic processes and risk analyses are well established. However, many actuaries who were formerly involved in investment management or education fear that the decision-making aspect in this field has been overtaken by erudite mathematics, the actuary's natural comfort zone.
In September, I received a stimulating article from Richard Fitzherbert, a retired investment actuary and honorary fellow at the University of Melbourne, entitled 'The Death of Genuine Investment Education Within the Actuarial Profession'. This bears out the feelings of all actuaries involved in practical investment activities.
The whole subject deserves to be debated through The Actuary magazine or elsewhere, unless actuaries wish to remain as superior number crunchers, leaving all management decisions to accountants, lawyers, bankers, politicians and economists.
Kent Sandom 10 November