By Roger Hayne
What is the skill set of actuaries in the United States? Consider the following two quotes from reports of the two United States-based actuarial organizations focused on actuarial education and research.
Actuarial skills, particularly their analytical and technical/mathematical skills, are valuable and difficult to find in other professionals. However, a common criticism of actuaries from the CEOs was that some actuaries are too narrow and too technical and that they need to develop general business skills and a broader business perspective.
—CAS Report of the CEO Advisory Task Force, November 1999
The traditional perception of actuaries—as having strong quantitative/financial problem-solving skills as well and high ethical standards—prevails….In positioning actuaries for senior positions, it will be important to enhance perceptions of their softer business skills, such as team leadership, business acumen, informed risk-taking, and innovative thinking. At the same time, however, it will be necessary to continue reinforcing actuaries’ quantitative strengths.
—“Attitudes and Usage of Actuarial Services among Employers in Key Sectors: Findings from Benchmark Survey,” Society of Actuaries, March 2008
The two studies cited above were taken nine years apart and surveyed on two different sets of actuarial employers, but both give reasonably consistent pictures. Actuaries are highly skilled technically but may face challenges moving from a technical position to a more senior business leadership position. There are probably a large number of reasons that this picture emerges. In my last column as CAS President, I will explore one factor that may be contributing to this image.
We point with justifiable pride to our method of qualifying actuaries. In order to become a member of the CAS, a candidate must prove worthy by passing a series of very rigorous examinations. To become a Fellow, that candidate needs to pass yet more, similar examinations. Looking at those examinations may shed some light on why the two views expressed above are so close.
Those examinations are based on a set of syllabus readings and designed to test specific learning objectives. The syllabus readings tend to be wide-ranging and cover a number of different concepts and details. The examinations tend to have a relatively large number of fairly detailed questions. Very often on some examinations, the focus is on calculations of specific amounts. Even nonquantitative questions tend to focus on details in syllabus readings. By and large the questions touch on specific items covered in individual readings.
With this focus on specific calculations in specific situations covered in specific readings, it may not be surprising that candidates who can apply specific calculations or specific notions in specific situations covered in the readings tend to be favored. This then gives preference to just the individuals described in the two pictures above, those skilled at applying specific methods to specific situations with a focus on technical details.
There is no doubt that these skills are valued and will continue to be valued in the future. However both of the quotes indicate that something more than these technical skills is needed for an actuary to become an integral part of the senior management team. I ask you to consider how we can step up our game and develop Fellows who have the kinds of skills that will enhance their worth within their firm.
It is often said, with good reason, that we cannot teach business skills, that business skills are more appropriately addressed in business schools and not on actuarial examinations. There is substantial truth to this observation. However, maybe there is something we should do in our examinations that does assure our employers that at least some of our members have skills beyond the mere quantitative that fit well into the qualities required in a senior manager.
One aspect of the “business skills” mentioned above is the ability to step above the detailed calculations and be able to see the big picture and to clearly communicate that understanding to others. Another aspect is the ability to take the considerable tools under our command to address problems not directly faced before. These skills can be tested but they are not in our current examinations. However, to do this would require tests of a substantially different nature than those we now give.
We can have examinations with fewer but much broader questions that require applying a variety of tools covered in the syllabus readings to problems that were not directly discussed in those readings. Such questions would require synthesis of a variety of concepts, sufficient understanding of the techniques covered to adapt them to novel situations, and a clear communication of conclusions and recommendations. Such examinations would require a major change in our approach to exams and would not necessarily be for every member.
One paradigm could be to maintain the more technical examinations for those who do not aspire to more senior positions and produce very competent members with technical mastery of actuarial methodology and principles. For those aspiring for more, we could continue with examinations that focus more on understanding and synthesis than rote application of reading calculations. We do not even have to invent new terms for these two levels of actuaries, we already have those names, Associate and Fellow.
In my first “From the President” column, I called on us to be creative in finding better and more imaginative ways to test skills that do not lend themselves to timed, written testing. Here, in my last one, I ask us to take a critical look at what skills we are looking for in our members, with a call to do better for ourselves now and for our members and our employers in the future.