The IFoA can guide the 21st century actuary by challenging the mindset, says Michael Tripp
Since 1981, I have watched with interest the changing nature of GIRO as my employment has varied between actuarial consulting and senior insurance leadership. In 33 years, the overall membership of the IFoA has grown from 3,500 Fellows to around 12,000.
Where the actuarial profession progresses next is a topic all corporate boards should be discussing at least once a year. The focus on mathematics associated with the actuary's key role is being affected by technology, analytical logic tools and the overall desire to chart the risk profile of the global consumer. So will the perfect future actuary be a double first in maths, or would an Oxbridge philosophy, politics and economics (PPE) student or PhD in computer sciences have a more rounded understanding of the unknown risks on the horizon?
Where are we now?
- Currently, the IFoA base is focused on the domains of pensions, life insurance and general insurance, with some investment interests and a broadening enterprise risk skill set.
- Following the Morris review, there is a robust governance structure, with clear professional standards and a quality assured framework that accepts peer review as normal.
- Mathematics remains the core discipline, and aspects of financial modelling and predictive tools are critical.
- The reputation of an actuary remains high, and with corporate governance more prevalent at board and non-executive director levels, actuaries play an important part in the regulatory framework of all companies.
- Actuaries remain relatively diverse personality types. Although, in terms of the Myers-Briggs personality indicator, they are typically slightly introverted, analytic and orderly thinkers, many are highly strategic.
Where do we want to be?
A narrow scenario could see the profession 20 years from now consisting of 20,000 Fellows still focused on pensions, life and general insurance. Some would dabble in the risk management space, but clearly domain expertise would remain vital. Occasionally an actuary would become a chief executive or other C-suite member. Exams and CPD would be technical and target specific subject areas, underpinned by targeted research.
Actuaries would comment publicly on a limited range of topics but in a manner admired and trusted by the public, and there would be investment in research to deepen the analytic skill base for specific financial modelling.
A wider scenario might see the profession double in size to 40,000 Fellows, and the IFoA would be part of a clear global alliance with two or three other actuarial bodies.
The actuarial domain would stretch well beyond insurance to any industry where financial and predictive modelling are key.
The profession's reputation would be built on deep-seated mathematical and technological skills coupled to process engineering; and there would be soft-skill development. Creating two streams of qualification, one based on maths and one on analytic logic skills, may be the answer.
Whichever of these future visions is considered - narrow or wide - the gap between where we are and what we want to achieve varies.
The IFoA needs an ambitious vision and this poses major questions.
- Where does maths lie in the future vision - should the profession be pursuing deeper, forward-looking techniques?
- Is maths the only bedrock? Actuaries have a penchant for critical thinking, yet there are analytic minds who just don't do maths!
- Is our modelling skill base adequate?
- Is the balance right between being a learned society and a business-based profession?
- Is the profession too risk averse?
- Should the IFoA become more active in public debates?
- Is domain expertise a strength or restriction?
- Should the IFoA have a purely regulatory role?
- How does the profession move faster without compromising standards?
Diversity
It is an overused word but, in this profession, it means protecting our mathematical skill base and investing in it, while at the same time widening beyond it.
At our core could be risk and financial modelling, but including behavioural expertise and wider process engineering skill sets.
Actuarial disciplines can be developed through the learned society approach, with more planned research using a variety of tools in the new social media channels. Regular comments on a variety of topics can be expressed.
Yes there is a risk - actuaries could lose their technical reputation, but there is also a risk in not changing.
Competition is high from technology and new platforms - it's up to the IFoA to fight to remain active and relevant.
Michael Tripp is partner and head of actuarial services at Mazars
