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From The President
A Question of Balance
By Ralph Blanchard 

An actuary then must be a mathematician, but a mere mathematician will be a very incompetent actuary.”
—Arthur Bailey, 18811
   

The CAS leadership periodically evaluates whether our education system is meeting the needs of its public, both in terms of preparing new members and keeping existing members current and relevant to the marketplace. This is a critical responsibility if the CAS credential is to retain its value. The evaluation process frequently includes both a self-evaluation and a survey of our current employers.   

Over the decades (yes, decades) those surveys have provided consistent feedback—actuaries are intelligent people with a strong sense of integrity and strong technical skills, but it would be nice if they communicated better and had a stronger business sense.2 More recently, self-evaluations have added another concern—are our members keeping up with technical advances in statistics? These advances include the use of generalized linear models (GLMs) in predictive modeling and copulas in evaluating tail risk.
Blanchard Quote
   

So what should the CAS do about this feedback? Should we focus on communication skills, business skills, or technical skills? Do we need actuaries to communicate more effectively to retain the value of our credential? Or do we need to focus on adding higher-level statistics training to our exams and continuing education offerings? As the title of this column suggests, I don’t see this as an “either or” situation.   

Instead, it is a question of balance. Actuaries add value to their employers or clients through a combination of skills. Our members are strong analytically and understand the operations that underlie the data, but we add value only to the extent that we can communicate what we find in our analysis. A brilliant finding or treatise that is never shared is nothing more than self-amusement. In addition, a brilliant finding with no business connection is nothing but trivia, possibly of value to a game show contestant but not to an employer or client.   

Assuming we agree on the areas of desired improvement, what do we (i.e., the CAS) do about it? Let’s tackle that question one piece at a time.   

(Caveat – the following discussion is the author’s current views of what might be done, and is not a definitive indicator of what will be done. Any of these suggestions would need to undergo extensive discussion at several levels within the CAS before any would be accepted for future implementation.)   

Technical Skills
This is the easiest place for most actuaries to begin the discussion. Almost all of us are very strong analytically, and so this is our comfort zone.   

For basic education, a likely place to make changes is in the early exams, possibly increasing the emphasis on advanced statistical techniques. An alternative approach might be to rely on a VEE3-type requirement to address this, but such an approach seems incompatible with our current exam structure. For continuing education, the CAS already offers Webinars and limited attendance seminars, but perhaps more should be done.   

Additional suggestions are welcome (including additional topics for continuing education).   

Communication Skills and Business Sense
It is easy to defer education in these areas to the employers of CAS members—and this has been part of the CAS response to this issue in the past—but is that the right action for the CAS to take in the future?   

Historically, the efforts the CAS has undertaken in this area have generally been incremental. These efforts include having educational sessions on business skills in conjunction with CAS meetings and conducting similar training as part of the CAS LeadershipMeeting.4 But is this enough?   

Other societies have tried a different approach. The Society of Actuaries has included in their Associate requirements a self-paced, e-learning course that attempts to address some of these communication and business skill issues.5 The U.K. Actuarial Profession has a required, two-day course on model documentation, analysis, and reporting.6   

Interestingly, this U.K. course has a prerequisite of “at least one year’s work experience with an actuarial employer.”7   

What approach should the CAS take? There are several possibilities. We could include open-ended problems in our exams, with part of the grade based on the adequacy and clarity of the documentation accompanying the proposed solution. An in-person seminar could be added to the professionalism course. We could also borrow an approach from another actuarial organization, such as the SOA or other exam-based society.   

Conclusion
The CAS must continually re-evaluate its education program. Standing still is rarely an option, and I don’t believe it is an option with regard to technical, communication, and business skills. But there is no single obvious solution—no single right answer.   

We are also aware that there are different kinds of actuaries, and there always will be.   

Some will always be more comfortable in the back room, developing the latest models and performing sophisticated analyses, while others will be more comfortable in the board room and selling to clients. But whether in the back room or the board room, actuaries need to have some feel for what is business relevant, need to be analytically strong, and need to communicate effectively to those in and those just outside their work circle8 to be effective.

1 Arthur Bailey’s Presidential Address to the Institute of Actuaries (1881), as quoted in John Shepherd’s “A Blueprint For An Actuarial Education,” a paper presented March 2010 at the International Congress of Actuaries in Capetown, South Africa, http://www.ica2010.com/docs/77_final_paper_Shepherd.pdf .
2 “Recent” surveys include: (1) CAS Report of the CEO Advisory Task Force, November 1, 1999, http://www.casact.org/about/reports/ceo.pdf; (2) SOA 2009 Employer Study, February 10, 2010, http://www.soa.org/files/pdf/about-2009-employer-study.pdf; and (3) A strategic review (“gap analysis”) by the U.K. Profession (2005), as referenced by a paper by David Wilmot presented at the 13th Global Conference of Actuaries in Mumbai, India on February 21, 2011.
3 Valuation by Educational Experience. See http://www.casact.org/admissions/syllabus/VEE.pdf.
4  This is an annual meeting of CAS leaders, including all committee and task force chairs and the Executive Council.
5 This course is called Fundamentals of Actuarial Practice or FAP. For more information, visit http://www.soa.org/education/exam-req/edu-module-fap-detail.aspx.
6 An online exam is offered for those unable to attend in person, e.g., overseas students.
7 See http://www.actuaries.org.uk/sites/all/files/documents/pdf/fandica22011syl.pdf for more information
8 This “work circle” for technical actuaries will include their back room peers and those outside their peer group with whom they deal directly, while for board room actuaries it will include the top level of management.

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