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Social Responsibility is Crucial To Long-Term Success of the CAS

by Alice H. Gannon

On May 5, 1999, the Wall Street Journal ran an article titled "Actuaries Become Red-Faced Over Recorded Pension Talk." A similar story was included on the NBC Nightly News the next day. I am sure that all actuaries who read or heard these stories found them distressing.

The stories quote tape recordings from the fall Society of Actuaries' meeting. The quotes were from sessions about employee benefits and the conversion many companies are making from defined benefit plans to cash balance plans. The implication of the stories is that actuaries have been part of deliberate miscommunication to employees about the impact of the conversion from one plan to the other.

I have no knowledge of whether the actuaries involved were guilty of any wrongdoing. I hope that they were not. However, I am sure that many members of the public were left with the perception that these actuaries are not performing their work with the best interests of the public in mind. I am also sure that the average member of the public makes little to no distinction between pension actuaries and actuaries who practice in other areas. The actuarial profession as a whole probably lost some credibility with the public because of these stories.

How likely is it that CAS members could be involved in a similar type of situation that might contribute to a negative impression of the profession? Is the CAS doing all that it should to help our members fulfill their obligation to the public and to promote a trustworthy public image of the casualty actuarial profession?

These are important questions for the CAS to address. Fortunately, the 1999 CAS Long Range Planning Committee (LRPC) had already identified "social responsibility" as one of the key "vitality drivers" to examine as part of this year's review of the CAS Strategic Plan.

On the Friday after the Wall Street Journal article appeared, I participated in a teleconference of an LRPC subgroup on this issue. Lee Smith, Roberta Garland, Anne Kelly and I met to flesh out in more detail the concept of "social responsibility" as a vitality driver of the CAS. The events of that week had made it even clearer to us that social responsibility is a critical factor in the long-term success of the CAS.

In this preliminary meeting we discussed our social responsibilities with regard to both volunteer public service and our responsibilities to the public as we perform our "paid" work. As we talked about the latter it occurred to me that we sometimes appear to fall short in this area, not because we are not fulfilling our responsibility to the public, but because we don't consistently frame our work in those terms.

Too many of us too often justify our actuarial analysis and conclusions only in terms of technical correctness or accuracy, failing to include the ultimate value-adding effect of the work. Even when we go beyond the theoretical justifications and present the practical value of the work, it is often just done in terms of value to our client or employer. We do not consistently include in discussions of our work the value brought to the ultimate end-user, the general public.

Focusing our work in terms of its public value would not change how we do the vast majority of our assignments or the conclusions we reach. Sound actuarial analysis of risk issues is of great value to society. Promoting actuarially sound solutions to risk issues is consistent with the long-term best interests of the public in almost every case. Our work is a positive force for the good of society. But by not being consistently intentional about that ultimate public outcome, we tend to not get full credit for the value we bring to the well-being of society. By our omission, others are not really given the opportunity to view us and our work as positively as we deserve.

I am looking forward to the LRPC's further discussion of social responsibility as a vitality driver for the CAS. We certainly welcome thoughts from any CAS member about what our social responsibility is and how the CAS can improve its support of its members in this area. I have always been proud to be a member of such an honorable profession and am committed to helping the CAS find the most effective ways to support the continuation of our profession's integrity as well as to promote a positive reputation for our profession with the public that we all ultimately serve.