Richard Purcell underlines the importance of professional standards, and how they create challenges and opportunities for actuaries
You may not find it the most enthralling topic, but regulation plays a fundamental role in our work.
From a professional perspective it can help drive higher standards and ensure we continue to serve the public interest. This month, Ben Kemp and Ann Muldoon (p14) discuss how the IFoA and the Financial Reporting Council work together to regulate actuaries, the planned changes to standards and key issues such as organisational culture.
On a more macro level, regulation can help address market inefficiencies and provide greater financial protection for customers. This creates both challenges and opportunities for us. European insurers know this only too well as they look to embed Solvency II. Here we have faced issues such as formalising expert judgment, as Raveem Ismail and Scott Reid (p25) reflect.
Other challenges, like the matching adjustment for less liquid liabilities, have proved more technical in nature and call for new approaches, according to Sathish Umapathy (p31). Of course, regulation can also have unintended consequences. David Prowse and Sam Mageed (p18) consider how Solvency II could create a herd instinct in allocating assets and actually diminish the ability of the insurance sector to withstand shocks. They explain what this and other issues could mean for credit ratings.
While regulation provides an essential underpin for our work, the reality is that changes to regulation can also consume significant amounts of resources, and we risk getting distracted from the real business of identifying and managing emerging risks.
This month, Paul Harwood explains why he thinks he's discovered a new risk (p13). Meanwhile, Matthew Edwards and Nicola Oliver (p28) look at one of the most serious problems according to the UK chief medical officer; the emergence of antibiotic-resistant bacteria, and the implications for mortality.