An ERM Designation for the CAS
The Strategic Viewpoint
Excerpted from the Report of the CAS Enterprise Risk Management Designation Task Force
In March 2007 the CAS adopted its Centennial Goal, which reads:
The CAS will be recognized globally as a leading resource in educating casualty actuaries and conducting research in casualty actuarial science. CAS members will advance their expertise in pricing, reserving and capital modeling, and leverage their skills in risk analysis to become recognized as experts in the evaluation of enterprise risks, particularly for the property and casualty insurance industry.
The first sentence speaks to the CAS’s aspiration to be recognized globally for the quality of its education and research. The second envisions CAS members becoming ERM experts. A robust ERM credential leveraging expertise in traditional actuarial areas is consistent with the Centennial Goal. Additionally, the CAS has specified that an ERM designation is being pursued for its current and future member actuaries. The successful implementation of a global actuarial ERM designation would be a big step toward the fulfilling the CAS Centennial Goal.
Beyond the Centennial Goal, the current financial crisis illustrates the growing need for ERM and professionals trained to evaluate risk. As markets and risks become increasingly interconnected, marketplace ripples in one area spill into others, sometimes with devastating effects. As risks cascade, such as with the credit and equity markets, the need to understand the risks’ interrelated effects—and in turn the impacts on individual companies—becomes increasingly critical. Companies need individuals who understand and are able to explain the underlying dynamics, and then guide their organizations through these turbulent waters.
Being trained to evaluate risk, actuaries can assume a significant leadership role in the ERM arena. The processes of modeling and evaluating risks, which are ingrained in their training and daily work, provides a significant theoretical and practical advantage over others. In addition, actuaries bring to the table the professional structure to help achieve the required quality of work. When actuarial standards of practice that establish minimum standards and a disciplinary process that actively enforces those standards are coupled with continuing education requirements to ensure the latest methodologies are being practiced, the end result is a powerful synergy that should provide confidence that the highest quality work product is being provided.
However, actuarial representation in the area of ERM has lagged behind other organizations. Some believe that actuaries have not promoted themselves as aggressively as those in other organizations. Other organizations have created certifications that help separate their members in the ERM space and give them an entrée into the risk-based career tracks that have begun to emerge with the promulgation of chief risk officers (CROs) across the marketplace. As these new risk designations emerge, the demands of the modern job market require evidence of training in a broad spectrum of risk evaluation and risk management issues.
Casualty actuaries can bring immense value to the ERM space. The CAS now has the opportunity to create its own foothold in the ERM landscape. By offering its members certification in ERM, the CAS would provide an opportunity to compete in this marketplace, opening the door to the chief risk officer and other roles in insurance and beyond.