Actuaries devote a substantial part of their professional careers to understanding risks so that they can make better-informed decisions.
The nature and sources of risk are diverse, but models are important tools regardless. 'Off-the-shelf', standard models are useful for analysing commoditised risks - but rapidly changing phenomena and a competitive environment mean that existing models must frequently be re-engineered, or new ones crafted.
Most actuarial models work with large of amounts of data and need to be scaleable, so they must be coded in computer programmes. This requires specialised knowledge that is beyond the realm of most actuaries - but programmers alone cannot produce robust models without understanding the underlying subject, for which actuaries have the key. Actuaries are also needed to test the programmes to ensure accuracy, interpret the results, and derive decisions from those results.
For years, The Actuary has been discussing the crucial role of technology in the actuarial profession. In this issue we dive deeper into the topic. Steve Paton describes how data analytics can be used to prevent and detect insurance fraud, while Richard Toomey explains the role of mapping technology in the context of environmental risks. Technology can also be a risk, though; Alizabeth Calder reflects on how it can cause operational and cyber risks that require novel actuarial solutions.
We also present other forms of actuarial innovation, beyond technology. Henry Simmons and Lloyd Jones review the shortcomings of the traditional UK property price indices used to calibrate equity release mortgages, while Ruud van Doorn and Benoit Rio examine the complexities and challenges of structured reinsurance solutions.
Enjoy the read!