By Lisa Slotznick
REPUTATIONAL RISK TO ACTUARIES—are we worried? The lead story in this issue of Contingencies on the reputational risk to actuaries’ principals (and in turn to actuaries) focuses on several topic areas—major insurance company insolvencies, climate change with its impact on availability and affordability of insurance, demographic shifts impacting solvency of retirement and life insurance programs, and artificial intelligence. A bad result of the loss of our reputation would be a loss of self-regulation.
What risk mitigation strategies can the actuarial profession take to protect its self-regulation status? What is our role as actuaries and ambassadors for the profession in the U.S.?
Let’s start with the basics. We receive our actuarial credentials in the U.S. but do not apply for a license to practice. In the place of a license, we self-regulate by agreeing to abide by the Code of Professional Conduct (Code), the U.S. Qualification Standards (USQS), and the actuarial standards of practice (ASOPs), and we are subject to the Actuarial Board for Counseling and Discipline (ABCD). Keep in mind that regulators can regulate our principals by requiring certain calculations and disclosures. But that is not regulating us.
The Academy, as the home of the independent Actuarial Standards Board and the ABCD, takes seriously setting standards by which actuarial practice can be judged and disciplined. The standards are set by actuaries for actuaries. The ABCD similarly is run by actuaries providing counseling and recommending discipline for actuaries.
But how do we keep vigilant and know the how, what, when, where, and why for which standard applies and how to uphold all the Precepts of the Code (which relate to more than just the technical ability of our actuarial work products)? After we receive a credential, we are not done. Under Precept 2 of the Code, we need to be qualified to do our work, which means—for U.S. related work—being qualified as set forth in the USQS, which is also housed within the Academy and guided by the Committee on Qualifications. The USQS describes not just the fundamentals of the basic education, but also the experience, knowledge of U.S. laws and regulations, and—even more importantly—our continuing education (CE) requirements.
As actuaries we are lifelong learners, not just because of the requirements of the USQS (or the threat of losing self-regulation) but also because of our natural curiosity and desire to excel at our work and to know “why.” The USQS provides a basic structure for this lifelong learning by making sure we get at least 30 hours of formal learning annually with a basic distribution—3 hours of professionalism and 1 hour of bias training, along with other more technical training, with 6 of those hours being in an organized activity.
The professionalism component of our annual learning is a way for us to refresh our knowledge of the Code and the ASOPs. Through multiple professionalism and bias webinars each year, the Academy provides CE opportunities that will help the actuary meet the CE requirements. If you miss a webinar, as a member you can use your Academy login to access the replay for free.
The professionalism component of our annual learning is a way for us to refresh our knowledge of the Code and the ASOPs.
But not all continuing education is professionalism. There is a role for all five of the U.S. actuarial associations to provide CE for technical matters so that the actuary can continue to perform well.
The Academy’s public policy work shines a light on areas important for the actuary’s awareness and where an actuarial perspective can help decision makers be more informed on critical issues. The Academy emphasizes what various public stakeholders, including regulators, need to know about the implications of changes in regulations or policy—not just on actuarial calculations, but on the bigger-picture financial institutions that may be impacted. In any given year, the areas of public policy focus often relate to the issues where we or our principals may have reputational risk.
So, coming back to the idea of risk mitigation strategies: Following the Code, with an emphasis on being qualified, keeping up to date through CE, and following the ASOPs is a way for individual actuaries to do their part
to maintain self-regulation. Then, in turn, you can support the Academy’s public policy work through volunteering for our committees as well as reading and sharing our work products with your contacts and stakeholders you engage with in your roles as actuaries and representatives for the actuarial profession.
The hardest part of our risk mitigation strategy is to follow Precept 13 of the Code, which relates to discussing potential violations with the actuary potentially violating the Code—and then, if unresolved, reporting to the
ABCD. A robust disciplinary and counseling process is a significant part of maintaining our self-regulation.
May we all continue to learn—not just for our own desire to know more, but to assist us in maintaining our self-regulation and being ambassadors for the strength and ongoing impact of the actuarial profession in the U.S.
LISA SLOTZNICK, MAAA, FCAS, is president of the Academy.
