From the President

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Developing Knowledge on a Worldwide Basis
by Robert F. Conger

I was fortunate to have the opportunity to speak at the GIRO meeting in Glasgow last October on the topic of developing knowledge on a worldwide basis, an exciting and challenging opportunity facing our employers, our profession, and us as individuals. Consider the need for us to develop our knowledge globally, and the potential benefits; the tools that exist to facilitate the exchange and collective development of knowledge; and the impediments to progress. What can we do?

The Need
First, is there a need for our knowledge to have a worldwide base?

For an answer, simply look at the direction in which our employers and clients are moving, and as importantly, the direction in which their customers are moving. Whether through organic expansion, mergers and acquisitions, or teaming and partnership arrangements, the people who use our services are increasingly becoming parts of worldwide—or at least multinational—organizations. They will demand that our knowledge base follow (or better, lead) their footsteps.

Further, what are your competitors doing? Who are your competitors: other actuaries? Other employers? Your employer or client's competitors? Other professions that are filling niches actuaries should be filling? Any way you choose to define your competitors, they, too, are increasingly moving to a worldwide base of knowledge.

It all adds up to a requirement that we have access to data from around the world and understand how other parts of the world work. We need this amount of information even if we don't plan to embrace or adopt or adapt that knowledge to our own purposes. Worded differently, it adds up to a rather negative reason to become an active part of the worldwide intellectual community: Do it or get left behind.

Opportunities and Benefits
I am not a big fan of negative reasons (threats, punishments, fears) for people and organizations to do things. These types of reasons often do produce actions and results, but not always through a constructive dynamic.

Consider a more positive perspective, namely, how do we stand to benefit from our active participation in increased global development of knowledge?

1. Better data to manage and analyze our business. Certainly as an analyst or business executive, you would access socioeconomic data for a new territory you are entering. Well, the globe is your new territory.

2. Better data to understand the dynamics affecting our business, even locally. With the interconnected global economy and the rapid worldwide cascading of consequences arising out of events occurring elsewhere, knowledge of these events and of these linkages can help us manage our local business better. If a butterfly flapping its wings in Beijing is going to affect the weather in my neighborhood, I want to know how many butterflies are in Beijing, what they are up to, and how that will affect me.

3. Better use of development efforts. Participating in the global development of knowledge avoids reinventing the wheel. If a colleague or competitor already has developed the wheel, I am better off spending my energy inventing the axle or the rubber tire.

4. Better tools with which to do business. By combining ideas and perspectives from different places, cultures, and disciplines (including different professions), we can develop ideas greater than the sum of the parts. Our DFA models are better tools thanks to the involvement of economists, asset experts, and operational risk experts on our teams. Some of the most exciting client projects I've been involved in have used multidisciplinary teams, such as actuaries, claims practitioners, general management consultants, and experts in human dynamics and organizations. Each brings a unique set of talents, perspectives, and experience to the table; the work-product is more comprehensive, and just plain better, than any one alone could have produced.

5. More fun and intellectual stimulation. Once you have made the decision to participate you will find new opportunities and new ways of looking at the world. It really is fun, and it really does exercise your brain!

Tools and Opportunities
There are many tools and opportunities. I would include:

The Internet. On the CAS Web Site (www.casact.org) we publish information about the CAS, our members, our activities, and virtually all of our newsletters and books, including historical volumes; we provide links to other organizations and other journals; and we host ongoing discussion threads on highly relevant, as well as some frankly irrelevant, topics. Other organizations offer a similarly rich array of resources on their Web sites. Still other Web sites are goldmines of data and information.

E-mail. Sharing ideas with a colleague halfway around the world is quick and effortless.

International meetings and meetings of other professions and other organizations. Take the time to attend or actively participate in one of these and you will find an exciting blend of kindred spirits and different perspectives, common views, and varied backgrounds.

Job relocations. Seek opportunities to work on jobs in other locations or in different kinds of projects. These opportunities need not even involve moving to a new continent. Many organizations need people to work on one-time projects or to collaborate with others in a virtual worldwide team without even leaving their desks. Teleconferencing, videoconferencing, and Internet tools, make these virtual meetings inexpensive and productive.

Impediments
Impediments to developing global knowledge exist in three critical dimensions.

1. Differing legal and regulatory frameworks. Today, much of our work is derived from regulatory requirements, such as the requirement for a statement of opinion on loss reserves. While these requirements have the beneficial effect of involving our profession in critical issues for our employers and clients, these same requirements also often produce the undesirable effect that the work is performed strictly within the narrow confines of that regulatory regime. Another slightly broader example is the tort liability system in the U.S., which is the basis for a huge proportion of our insurance products (and insurance problems!) and for a huge proportion of the work of our casualty actuaries. The considerable intellectual energy that U.S. actuaries spend dealing with the tort system may be of limited use in other jurisdictions; and actuaries from other jurisdictions need to learn about our legal system before they can be effective working on various problems in the U.S.

2. Cultural and language differences. Even within the English-speaking world, we use different phrases and words to describe the same concepts. Some basic actuarial vocabulary and tools differ. These differences, while surmountable, make it more difficult for us to work together, and more difficult for us to collaborate on the development of more advanced tools and ideas.

3. Inertia. It is easier and more comfortable to continue thinking about a problem by ourselves, in the way we are accustomed. I think of a five-year-old unsuccessfully trying to tie a shoe, and insisting, "I can do it myself!" This natural tendency is reinforced by the fact that we are being bombarded and overloaded with sensory and intellectual input from the same kinds of sources, as we would exploit for global knowledge development. We simply don't have the time and energy to sort out what's valuable.

Organizational Initiatives
There are some things that we must do as organizations, and there are some opportunities and needs for us to take individual initiative. As organizations, we need to:

• Make it easy to cross-access papers that have been published by others, examples of actual work-products, and works-in-progress such as the discussion of working parties and committees.

• Publish papers and committee work-products in a manner so that others can access them.

• Cross-collaborate on exams, using measures such as common learning objectives, syllabi, and exams, as well as incorporating one another's material and ideas on our own syllabi.

• Cosponsor and codevelop meetings, seminars, and videoconferences, working with other actuarial and nonactuarial groups to develop content, multidiscipline panels, and presentations, and to deliver that content to a diverse audience.

• Assemble joint committees so that people from diverse perspectives are working together—actuaries from around the globe, and actuaries working with nonactuaries.

• Work towards mutual recognition and granting practice rights to appropriately educated and experienced actuarial colleagues, creating both the incentive and the opportunity to practice around the world.

• Think more broadly than mutual recognition. Mutual recognition is a concept derived from the regulatory frameworks. A more important path in the long run is to develop and promote the capabilities for actuaries to do the work that has real business value outside the regulatory framework, because this kind of work has global value without needing to be translated between different regulatory frameworks. We can see some excellent examples in the programs of meetings such as the recent GIRO/CAS meeting in Glasgow; and in the incubating work the profession supports in developing DFA as a real tool to address business issues such as reinsurance strategy, asset allocation, and capital analysis. Other incubating efforts are underway today in wide-ranging areas such as enterprise risk management, asset/liability management, customer value measurement, business planning, catastrophe modeling, refined classification analysis and loss prediction models, and data mining, as well as working with nontraditional employers and occupations. I am convinced that these new areas are the key ingredient to converting our steady diet of regulatory compliance work into a feast of business and intellectual opportunities.

Individual Initiative
Take a risk and get involved in a project that is outside your comfort zone. That's where we do some of our best growing! More specifically:

Talk to people in other disciplines and other countries about a problem you are working on. Get their input and ideas. Invite people in other disciplines and other countries to participate with you on a committee or working group, or on a project.

Attend a meeting in another country or of another profession. While there, talk to those folks. Work with someone from another country or profession to present a paper or an idea. Look at other organizations' Web sites.

Write down an idea you have had, or that you have used on a real problem. Don't worry if it's not the biggest idea ever. Small incremental ideas add up in a big way. Write it down and share it, so that others can use it, and can add to it.

Participate in a committee or working group, in your own organization or others. Get involved in a project at work that is not just regulatory-compliance based. Be open—listen and learn.

Global knowledge development: the need exists and the potential business and intellectual benefits are huge. Come to the feast with your own contributions, and be prepared to enjoy the offerings of others. A banquet awaits!