|
|
|
From the President
A Primer on CAS Governance
by Mary Frances Miller
The recent mega insolvencies and corporate scandals have turned the public's attention to what constitutes good corporate governance. Companies that place too much power in the hands of a single individual or a small group face dominance risk—an operational risk that Jeremy Goford (president of the U.K. Institute of Actuaries) characterizes as one of the greatest threats to an enterprise's long-term stability. Dominance risk played a major role in the insolvency of HIH, the largest personal lines carrier in Australia. A few "entrepreneurial" personalities with grandiose expansion ideas were able to bet the company's surplus on their pet projects largely because there was no voice of restraint.
What is the CAS's exposure to dominance risk? I have chatted with CAS members about this issue on several occasions, only to discover that a substantial portion of our membership is a bit hazy on just who has what authority in the CAS leadership. So I am devoting this column to a primer on the CAS governance process, along with an invitation to become more familiar with the process by sitting in on CAS Board meetings.
CAS success as an organization rests on three critical groups of people: the elected board, who determines policy and direction for the Society; an enormous volunteer committee structure, headed up by an appointed Executive Council (EC), to carry out the business of the Society; and a very fine permanent staff who makes everything happen.
Our board of directors consists of twelve elected regular directors plus the president, the president-elect, and the immediate past president. The board meets four times a year; all significant policy decisions are made at those meetings. The board chair is the past president. Six vice presidents plus the president and president-elect make up the EC. Unlike many of its sister organizations, the CAS makes a clear distinction between the elected board—the policy makers—and appointed vice presidents whose responsibility is to carry out the board's directives. In many other organizations, EC members are also voting board members and the president chairs both bodies, effectively creating a more influential board within the board. In the CAS, only the president and the president-elect sit on both the EC and the board, and since the board chair is the past president, the president's influence on the board is limited.
How, then, does the CAS make decisions? How do policies change? Ideas come from all over. They may be suggested by an individual member in a phone call to a VP, the president, or a board member. A committee may suggest a change. A few of our committees, such as Education Policy and the Long Range Planning Committee, exist pretty much just for the purpose of making recommendations. Some changes are prompted by outside influences, such as the International Actuarial Association's minimum standards for qualified actuaries. Other ideas are initiated by board or EC members. If the suggestion falls within the scope of an existing committee, the EC will ask that the committee study the matter and put together a recommendation.
If there is no logical committee to tackle the question, or if the idea is especially far reaching, the EC will often ask the board for permission to form a task force just to investigate and report back on that one idea. Board-initiated questions are usually handled by task forces that report directly back to the board itself. The EC reviews the committee or task force report and places the item on the board's agenda, usually along with a recommended board action. Occasionally, board-initiated task forces deliver their recommendations directly to the board.
Then comes the fun part. Fifteen independent-minded board members attempt to come to a consensus. Each director has an equal voice in the process. Discussion continues until all have had an opportunity to contribute. Only in very rare instances is the original recommendation adopted by the board without amendment. Board discussions are far reaching, and directors try to make sure that they have evaluated all of the implications and taken all of the members' and candidates' interests into consideration. Sometimes it takes more than one board meeting, with additional directed research, before a decision is made. Given the responsibility that each board member displays, we have little worry that a single, dominant individual could steer the Society far from its best course.
The next board meeting is Sunday, May 16, in Colorado Springs. This is the Sunday of our Spring Meeting, and I invite all members to schedule your travel a bit earlier so that you can arrive in time for the board meeting. Two very important task forces will be delivering their reports, so we have scheduled their presentations to begin at 11:30 a.m. to allow for as many people as possible to arrive in time to hear the board's deliberations. The Task Force on Membership Classes is charged with developing a recommendation on how many classes of membership are needed in the future CAS, and on how the classes should be defined. A second task force has been considering the appropriateness of expanding the role of Associates in the leadership and governance of the Society. Please join us in Colorado as we consider these core policy questions.
