The Future Actuary Volume 13, Number 2, Summer 2004

COVER story
   A moving image—Reflecting the future of the actuarial profession
CAREER focus
   Network maintenance—Make your network work for you
GLOBAL view
   Life as a Malaysian actuary
Be An Actuary web site
   Other Issues of the Future Actuary

About actuaries: How to increase awareness about actuarial science. A students

A moving image—Reflecting the future of the actuarial profession
by Sarah J. Sanford and Michael L. Kaster

Actuarial jokes aside, it should come as no surprise to anyone (actuaries least of all) that their image may be something of a double-edged sword. For more than a century, actuaries have been perceived as the bedrock of the insurance business, purveyors of hard reality, voices of reason and caution whenever the marketing side strayed too far toward irrational exuberance.

So it’s not surprising, at a time when actuaries want to branch out into new, more adventurous fields, that their traditional image might be something of a handicap.

“The image of the profession is something we all care greatly about,” says Barbara Lautzenheiser, president of the American Academy of Actuaries. “We have many strengths as a profession that can help the public in many different arenas. The question is, do the public and employers realize this?”

“There are common misperceptions out there about our profession,” echoes Mike Lombardi, president of the Canadian Institute of Actuaries. “Both Canadian and American employers seem to share these misperceptions—and not everyone is aware of that.”
“Is there a problem? You bet,” agrees Neil Parmenter, president of the Society of Actuaries. “The image problem is the proverbial ‘elephant in the living room’ that everyone—by tacit agreement—seems to either ignore or avoid speaking to directly. But it’s an issue that needs to be addressed now.”

Historically, actuaries are a relatively small community (approximately 25,000 in North America) engaged in work that many outsiders regard as arcane and tedious but essential to the profitable operation of the insurance business. Secure in their position, they’ve always been able to laugh off negative stereotypes. So what if nobody else understands what actuaries do? They understand it perfectly.

Actuaries themselves admit they haven’t always been good at explaining what they do to outsiders—even employers and potential employers. As more and more have gone into the benefits consulting business and become entrepreneurs, they’ve had to develop new skills, becoming communicators as well as actuaries.

Enter Risk Management
Within the insurance industry—the traditional actuarial stronghold—market forces are changing the way business gets done. Companies are using more diverse distribution channels than ever before to achieve customer focus and intimacy. Cost-cutting is also on the rise, as companies strive for reduced operating expenses in hopes of maximizing shareholder value. And who knows what impact the decline of defined benefit pension plans and changes in the ever-volatile health insurance business will have?

At the same time, the barriers between the various components of the modern financial services industry are crumbling under the effects of the Financial Services Reform Act of 2001. Rather than separate silos of narrowly defined interests, enterprise-wide risk management is the new world order. Companies have created a new executive position, corporate chief risk officer, as someone who can evaluate and supervise all the risks a modern company faces.

Actuaries see themselves, their analytical skills and rigorous thought processes, as a perfect fit for this brave new world. The question is, do their potential employers? Suddenly, actuaries find themselves competing with MBAs, accountants, economists, financial engineers, certified financial analysts (CFAs) and numerous others for these important new positions.

What do actuaries bring to the table that these others don’t? Do employers have an accurate understanding of the actuary’s position in the new financial landscape? Or are their perceptions based on misunderstanding and stereotypes?

What Actuaries Are Up Against
To attempt to answer these questions, the Society of Actuaries (SOA) recently conducted two rounds of research that evaluated perceptions of employers and potential employers of actuaries, as well as the same perceptions among actuaries themselves.

In addition to the recent surveys, the SOA reviewed 17 years of research conducted by actuarial organizations. This extensive effort (sponsored by the SOA’s Strategic Planning Committee) was performed to see if employers harbor negative preconceptions about the actuarial profession and if the market’s view of actuaries is in alignment with how actuaries view themselves. Were the two in agreement, or was there a substantial disconnect? The answers were somewhat surprising.

In the 2003 SOA surveys, respondents were asked if the profession faced more or less competition from related professions than in the past. There was agreement from both actuaries and employers of actuaries that there is more competition than ever today.

While MBAs, certified financial analysts (CFAs) and other risk management professionals are encroaching, to some degree, on traditional markets, actuaries are competing with these same professionals as they seek to enter nontraditional areas, such as the broader financial services market.

This situation will continue to evolve as actuaries advance in new markets. And advance they have. From 1990 to 2002, the number of SOA members working for banks and investment advisers has grown at an annual rate of 15 percent. These pioneering actuaries, working to establish beachheads in new markets, need to be armed with as many weapons as possible to ensure their success and, by extension, the profession’s. If actuaries’ role in traditional areas is shrinking, it’s even more important for the profession to support these pioneers in new territory.

Meeting Market Needs
Remaining relevant in today’s marketplace—in either traditional actuarial positions or new markets—requires that employers view actuaries as possessing the right skill sets for the positions they’re trying to fill.

In the 2003 member survey, respondents were asked to rate actuaries on 18 specific skills and characteristics (ranging from quantitative analysis and complex problem solving to business communication skills and overall business acumen). For each attribute, they were asked to separately rate actuaries’ performance and the need for improvement. At the same time, the market survey asked employers to rate the performance of actuaries versus “others typically employed”—competitors—on the same set of attributes.

Actuaries rated core actuarial skills such as “quantitative modeling” and “solving complex problems” high in performance and the need to improve these skills as relatively low. Employers rated actuaries’ performance the highest in “being ethical,” “quantitative modeling,” “solving complex problems,” and “financial assessment and reporting.” The good news is that both sides seem to be in relative agreement on the strengths of the profession—an opportunity for actuaries.

“While the profession has many strengths, there is still a need for improvement,” says Parmenter. “There’s great potential for actuaries, according to the research. Our strength in quantitative modeling and solving complex problems is clear, and this is a skill the market needs, especially in an ever-changing and evolving environment. We need to leverage this strength and show new-market employers that the actuarial skill set applies to their business issues. Actuaries can help grow a business, manage the business and shape the future of the business.”

Both actuaries and employers agree that the profession needs to improve in the same four skills: business communication, ability to focus on the big picture, business acumen and being proactive. Business communication was identified by both groups as the top issue needing improvement.

Further qualitative research, as well as substantial anecdotal evidence, validates this data. Countless times during discussions with top executives it has been pointed out that actuaries—as a whole—are less and less involved in the senior decision-making process. When asked why this is the case, business leaders overwhelmingly point to the same reason—a perception that actuaries aren’t skillful in communicating the knowledge they have. Actuaries will become marginalized if they cannot convey the key business implications of their analyses to senior management.

“Businesses today need individuals who can process a rapidly evolving environment and provide thought leadership to help advance business opportunities,” says Mary Frances Miller, president of the Casualty Actuarial Society. “When compared to competing professionals, the market is saying that they think actuaries should be thought leaders to their business issues. The market doesn’t look to the MBAs, CFAs, accountants or any other profession to provide this thought leadership. Actuaries are perfectly positioned to be the thought leaders in the area of managing risk.”

But reviewing the profession itself isn’t sufficient; we must also understand with whom we’re competing. Within the data analysis, employers scored competing
professionals highest on intellectual agility, being proactive, reliably getting the right solution, being a team player and being ethical. The competition scored lowest on risk management, industry knowledge, being bold, taking informed risks and being an adviser. Being an adviser, i.e., providing thought leadership, was again shown as the actuaries’, not the competing professionals’, forte.

With regard to business communication, competitors were rated substantially higher. Thus it appears that the competition is strongest where the actuarial profession is weakest.

Employers in the broader financial services market rate actuarial performance in a very similar manner as traditional employers. However, they rate actuaries with an even lower score than traditional employers in business communication, business acumen, focusing on the big picture and innovative thinking—a factor that would seem to predict even greater challenges to actuaries looking to advance in this booming area.

“The days of actuaries’ being content to talk just to each other, using impenetrable jargon, are over,” says Lautzenheiser. “We need to rethink and change the entire actuarial culture. We are not our audiences. Others are! We need to find ways to share our knowledge, expertise and thought leadership with the world.”

Credential Value
Consistently, members of actuarial organizations report how important the “value of the credential” is to them. How valuable are actuarial credentials to employers? In the survey, employers were asked to identify the three primary credentials they look for when hiring professionals to help their organization manage risk in all forms.

In this area, there’s a dramatic split between traditional employers and employers in broader financial services markets. In the traditional markets (insurance, reinsurance, and consulting), a large majority of employers consider an actuarial credential when hiring risk professionals. In the newer fields, however, actuarial credentials are still not recognized.

In the broader financial services market (nontraditional markets), the majority of employers look for a CFA and MBA, though the financial risk manager (FRM) and advanced degrees in finance also rank above actuarial credentials.

Our research indicates that this is due, in part, to the images associated with the competing professionals. MBAs are often viewed as well-rounded professionals, capable of applying their skills and knowledge to a wide range of business problems, whereas actuaries are sometimes viewed as analytic and numeric and not able to “see the big picture.” Being aware of this perception, many actuaries are acquiring additional education following their attainment of the ASA or FSA designation.

In the 2003 member survey, nearly 20 percent of respondents indicate they’re currently seeking a non-actuarial credential or intend to do so within the next two years. Of those individuals, most are seeking either an MBA or the CFA designation. Survey responses from those pursuing an MBA indicate that the chief motivations for attaining this credential are improved business skills, expanded career options and the sheer value of holding a more widely recognized credential. The motivation for pursuit of the CFA designation is quite similar.

Going Forward
The problem has been defined. What’s the solution? The survey results were recently reviewed with the Council of Presidents and esidents Elect (COP/COPE) of the actuarial organizations in North America. Leaders of these actuarial organizations are in complete agreement that some action must be taken.

“We’re a strong profession,” says Lautzenheiser, “with many individuals who can help solve problems at many levels. This is true not only for employers but also for the public. We simply must do a better job of communicating to these constituents, so that they see the value we can provide.”

Crowder agrees: “In order to improve the image of the profession, we must consider an integrated plan, which addresses many of the elements identified in the recent research. There is no question that our image as a profession is in need of change. And there is no question that we can no longer rest on our quantitative strengths; the market expects more of actuaries. Improving skills to help businesses through thought leadership and business acumen is important. Once we have put in place initiatives to improve these skills, we will also need to start selling the profession and the unique set of integrated skills that actuaries bring to business situations. And perhaps most important, we need to all work together—as a profession—to accomplish these goals.”

While the research points out some sobering truths, and certainly indicates a call for action, the news is not gloomy. There are challenges ahead, but actuaries—if they choose to do so—can have strong input into how their image is promoted and advanced.

“The profession is still highly regarded,” says Parmenter. “But we can’t assume that this regard will continue. We’ve seen that in the blink of an eye, a profession can fall from grace. We, too, are vulnerable to this possibility. But if we keep our focus on continual improvement and advancement of our profession,we will remain vibrant and relevant.”

By addressing the “image issue,” the actuarial profession will be able to continue not only to maintain its relevance but also to expand successfully into new markets. This process will certainly not happen overnight but will be the work of a committed, ongoing effort. If successful, perhaps it will even mean the end of the traditional “actuarial jokes” so commonplace today and the arrival of a whole new image.

Sarah J. Sanford is executive director of the Society of Actuaries and Michael L. Kaster is senior vice president, product and risk management, Conseco Insurance Companies, Carmel, Ind.

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Network maintenance—Make your network work
for you
by Erik Summers

So your networking skills have proven successful. You landed the big _______ [insert “job,” “internship,” “promotion” here], which means it’s about time you stopped worrying about your network and get on with those actuarial exams, right? Go ahead and pursue that next exam with reckless abandon, but don’t forget about the people and methods that landed you with paid study time. Whether your network extends around the globe or includes only your dog named Derivative, your existing relationships and networking skills can never be too strong.

For those still wondering how family pets can be hooked up to a LAN, this isn’t your techie’s networking. Networking in the business world is simply the purposeful development of relationships with the goal of gaining career-related information or informing potential employers about you. Networking requires no special skills and no secret code, just some effort and knowledge of the basics. Here are some tips that will have you sipping cocktails with the VIPs in no time.

Honesty: If you have ever been turned down for a position, you know this one already. While the “thank you for applying… there were many qualified applicants” line is courteous, it is anything but helpful in learning how to improve. Your network, however, is much more likely to call a spade and spade and tell you to get a haircut if need be, especially if asked for an honest evaluation of you and your abilities.

Knowledge: While The Future Actuary works hard to keep you up-to-date on the latest trends in the world of an actuarial candidate, an eight-page, quarterly publication can only do so much. The amount you can learn from your network, however, is limited only by your effort and your creativity. There are many sources of information in the world today, but few are as applicable and pragmatic as the advice of someone who knows you.

Advancement: While sources differ on the exact percentage, it is generally accepted that only 25 percent of all jobs are formally advertised. How are the other three-fourths filled?

Networking. While we, as aspiring actuaries, are fortunate to be in a field where firms actively pursue young talent, the fact that networking plays a large part in landing a job is no less true. Often relationships formed during internships are direct feeders to full-time positions.

Self-Actualization: When considering Socrates’ famous line, “Know thyself,” one wonders, was this guy a revolutionary thinker in both philosophy and networking? To be helped toward a goal, one must first choose the goal. While networks can be useful in defining your direction, they are most helpful when you can articulate a clear vision for the future. Armed with this knowledge, you can create a concise, personal sales pitch that includes your current circumstances, what you can offer, and what you seek. Equipped with such information, your network will work for you.

Start Small: While all of us would like to have a network boasting names like Trump, Buffet, Turner and Kellison, networking is not about “knowing the right people.” It’s about starting with relationships you already have and putting them to use for your career. “Networking is not work if they are your friends,” says Jeremy Lane, an actuarial student at Swiss Re Life & Health North America and avid networker. Spend time networking with people from different backgrounds and experience levels to broaden your options, not only the rich and influential or those who you think can offer you a job. These people are often the busiest and most saturated with such requests. Jeremy recommends reviewing the passing candidates list on the SOA Web site following the distribution of exam results as an opportunity to contact past acquaintances. “They are guaranteed to be in a good mood,” he says. Also, he suggests that people on both sides of an interview take the time to make a networking opportunity.

Organize: Outdo Santa. Make a list and check it often. Creating and maintaining a network is a long-term endeavor that can begin before college and continue for decades. Relationships take time to initiate and sustain. Therefore, create a list of your contacts along with all of their essential information. Commit to contacting each person on the list at least once a year, to update him or her on your progress and goals. Also, be sure to request additional contacts from those in your network. If done politely, this practice is anything but rude, and often quite effective.

Say Thanks: While most people enjoy helping others succeed, they will still appreciate a bit of gratitude. Always be courteous and send a thank-you e-mail or, even better, a short handwritten letter promptly. They may remember such small gestures when the next hot job or tip comes around.

Carpe Diem: It is never too soon or too late to begin or continue developing your network. As actuarial students, networking offers yet another reason to seek balance between life and study. Because who knows—the friends you make when you could be studying just might lead to your next job.

Erik Summers is a member of The Future Actuary editorial board and a student at Butler University.

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Life as a Malaysian actuary
by Sing Yee Yeoh

If you scroll down the list of the SOA examination centers, you can’t help but marvel at the seemingly endless locations at which actuaries can work. For example, I work in Kuala Lumpur, that city with those big towers made famous by actress Catherine Zeta-Jones in the movie “Entrapment.” I suspect few, if any, non-Malaysians (and even some Malaysians) know anything about life as an actuary in Malaysia. As much as I hate to admit it, my misgivings were duly confirmed by the arrival of my new American boss almost a year ago. It seems almost too easy to recall some of our more memorable conversations, especially those that centered on our job functions. I guess he found our involvement in every aspect of actuarial work a little unusual:

American boss: “So, which actuarial function are you primarily responsible for?”
Me: “I’m the profit manager, but I help out on pretty much everything.”
American boss: “Everything meaning what?”
Me: “You know, pricing, embedded value, reserve adequacy, experience studies, cash-flow projections, organizing weekend trips to Thailand…”
American boss (looking very perturbed): “Wow. Weekend trips to Thailand, eh? That’s an actuarial function in Malaysia?”
Me: “Yes, it’s sort of my unofficial actuarial specialty.”

Life as an actuary in Malaysia isn’t really about organizing weekend trips to Thailand (just in case any of you were wondering) it’s about managing a broad umbrella of actuarial responsibilities on a daily basis. Since the majority of life insurance companies in Malaysia employ only a handful of actuarial staff, each of us is responsible for managing a diverse range of actuarial projects, either directly, or indirectly through assisting our colleagues in their work functions. Yes, at times this is daunting (mostly between the months of January and December), but it has enabled me to garner a thorough grasp of how all actuarial work fits together. For example, the results of our yearly experience studies are used to set the best-estimate assumptions, which in turn are used to project future cash flows for management, which influence everything from product pricing to reserve-adequacy testing to embedded value. Understanding the process certainly makes it a little easier to explain that actual reserve adequacy is different from what we anticipated, because people’s deaths are sometimes unexpected.

Now you may also be wondering if time constraints are a bigger issue in Malaysia than in other countries because we seem to be very busy at work. The answer is that we cannot magically produce extra time, but we try to use the time we have as efficiently and intelligently as possible, if only for the compliments my American boss always seems to promise but never actually delivers. Regardless, we always try to abide by the following simple principles to minimize any and all unnecessary work (and frustration):

First, in advance, we always discuss and agree on the procedure and methodology we plan to follow in completing our analysis. This preparation enables us to consistently tie together disparate work products and ensures everyone designs his or her individual piece to fit the whole.

Second, we like to stay focused on what we are trying to accomplish and whether management will be able to make informed decisions using information generated by our actuarial work. I’m quite confident that no matter how good my work may be, my boss will never compliment me on it if he finds it to be of no practical use.

Third, we prioritize – I rank my assignments in order of importance. Then I decide which tasks I will need to complete first.

Fourth, as a business unit, we are constantly exchanging ideas for improvement with our regional office. This has led to improved calculations as well as a greater understanding of the underlying reasons for many of the actuarial reports we produce. I’ve found that by following the above principles, I have been able to consistently produce higher quality work (with less frustration) over the past two years.

So how did I begin my career as an actuary? Well, to be honest I don’t remember the exact moment I decided to become an actuary, but since I always excelled at mathematics, engineering wasn’t sufficiently “cool,” medicine made me too squeamish and I found law too boring, actuarial science was my natural (and only) fit. Besides, Malaysian actuaries are very well respected and their opinions hold great weight in the business community. This strongly appealed to me because it provided a clear model for the type of professional I want to grow to be.

All in all, I love working as an actuary in Malaysia. I think this view holds true across the industry because there has been robust growth over the past few years both in the number of students of actuarial science and actuarial professionals belonging to the Actuarial Society of Malaysia. Of course, Malaysian actuaries know how to have a good time as well. It’s common to see us out as a group trying to manipulate the gambling tables or calculate the credible probability of actually knocking down the last nine bowling pins. I guess what I’m trying to say in conclusion is that it’s very important to us to enjoy what we do, who we do it with and why we do it. And all the Malaysian actuaries I know seem to do all that and more.

Sing Yee Yeoh is a senior actuarial associate at ING Insurance in Malaysia.

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About actuaries: How to increase awareness about actuarial science. A student's point of view
by Jeremy Lee

As a by-product of today’s media-saturated culture, stereotypes about the actuarial profession abound. Films such as “About Schmidt” and “Along Came Polly” perpetuate a clichéd image of actuaries, leaving the public largely uninformed about actuarial science. To outgrow this antiquated image, which could potentially stifle the advancement efforts of our profession, it is vital that measures are taken to increase awareness of actuarial science in the general public and in the financial community. To address this need, the Society of Actuaries will be launching a campaign this fall that aims to educate business and society about the actuarial profession.

In order for our profession to thrive in the face of increasing consolidation in the insurance industry and the shrinking availability of traditional jobs, we need to expand its definition and scope. Through innovation, a path can be forged for actuaries to take on a greater role in the financial community. However, for this to be achieved, employers and recruiters in business and industry must be convinced that actuaries can credibly fill these roles.

To attain this goal and simultaneously foster innovation within the profession, the marketing campaign should promote actuaries as not only being experts in the field of insurance, but also as professionals with a potent mix of technical skills and financial insight; emphasis must be made on specific actuarial skill sets that are significant to areas as broad as investments, financial risk management and quantitative finance. As it is essential that the actuarial designation command specific and meaningful value to employers, an effective form of marketing could take the form of an advertisement showcasing an actuary who has succeeded in investment banking by applying his actuarial skills.

Another key approach to developing an actuarial presence in financial areas is to encourage actuaries in managerial positions working in nontraditional fields to champion the hiring of fellow actuaries. By working alongside other professions and promoting an interdisciplinary approach, non-actuarial finance professionals will be able to form an accurate perception of the actuary’s capabilities. At the same time, consultation, communication and cooperation between different fields cultivate a diverse and highly interactive working environment.

In addition, actuaries should establish a stronger presence in renowned industry periodicals through the publication of reports or articles on broad financial topics. This will promote the image of actuaries as being strong developers, innovators and communicators of novel and technically sound approaches to financial issues.

In order to determine the most appropriate niche for actuaries in the financial community, we should obtain feedback from industry leaders to enable us to gain a greater understanding about their perception of actuaries. Through questionnaires, financial leaders can convey the specifics of what they require in financial professionals, and actuaries can in turn improve areas of perceived weakness or realize the need to promote certain skills more effectively.

Effective marketing requires considerable strategic planning before implementation. Clearly, we need to position ourselves as highly capable in broad financial areas and convey a unique sense of who we are and what we do. In order for the campaign to be successful, it should engage not only external advancement strategies, but also undertake an internal approach by seeking the input and support of actuaries themselves. Before the campaign is launched, it is crucial that significant internal dialogue be conducted, especially among executives and actuaries in managerial positions. We must ensure the presentation of a consistent and united front to industry representatives and the media, taking care to prevent a lack of vision from diluting the impact of the campaign. Thus, it is important that we foster a sense of community and develop common goals for the future of our profession. To be successful, we need actuaries who are willing and eager to exemplify the messages presented in the campaign.

Dispelling the image of the actuary as a poor communicator who works only with numbers and a calculator is the first step in strengthening our profession’s image. In a society in which the actuary is often misrepresented, elevating the image of our profession is imperative to securing opportunities outside of traditional actuarial work. As the future direction of our profession hinges, in part, on the effectiveness of our efforts to increase awareness of actuaries, we must be vigilant in developing and maintaining the image of a dynamic and innovative profession.

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Jeremy Lee is a fourth year actuarial science student at the University of Waterloo in Waterloo, Ontario, Canada.

From The Future Actuary, Vol. 13, No. 2, Summer 2004
Copyright 2004 Society of Actuaries
and Casualty Actuarial Society

A moving image—Reflecting the future of the actuarial profession by Sarah J. Sanford and Michael L. Kaster Actuarial jokes aside, it should come as no surprise to anyone (actuaries least of all) that their image may be something of a double-edged sword. For more than a century, actuaries have been perceived as the bedrock of the insurance business, purveyors of hard reality, voices of reason and caution whenever the marketing side strayed too far toward irrational exuberance. So it’s not surprising, at a time when actuaries want to branch out into new, more adventurous fields, that their traditional image might be something of a handicap. “The image of the profession is something we all care greatly about,” says Barbara Lautzenheiser, president of the American Academy of Actuaries. “We have many strengths as a profession that can help the public in many different arenas. The question is, do the public and employers realize this?” “There are common misperceptions out there about our profession,” echoes Mike Lombardi, president of the Canadian Institute of Actuaries. “Both Canadian and American employers seem to share these misperceptions—and not everyone is aware of that.” “Is there a problem? You bet,” agrees Neil Parmenter, president of the Society of Actuaries. “The image problem is the proverbial ‘elephant in the living room’ that everyone—by tacit agreement—seems to either ignore or avoid speaking to directly. But it’s an issue that needs to be addressed now.” Historically, actuaries are a relatively small community (approximately 25,000 in North America) engaged in work that many outsiders regard as arcane and tedious but essential to the profitable operation of the insurance business. Secure in their position, they’ve always been able to laugh off negative stereotypes. So what if nobody else understands what actuaries do? They understand it perfectly. Actuaries themselves admit they haven’t always been good at explaining what they do to outsiders—even employers and potential employers. As more and more have gone into the benefits consulting business and become entrepreneurs, they’ve had to develop new skills, becoming communicators as well as actuaries. Enter Risk Management Within the insurance industry—the traditional actuarial stronghold—market forces are changing the way business gets done. Companies are using more diverse distribution channels than ever before to achieve customer focus and intimacy. Cost-cutting is also on the rise, as companies strive for reduced operating expenses in hopes of maximizing shareholder value. And who knows what impact the decline of defined benefit pension plans and changes in the ever-volatile health insurance business will have? At the same time, the barriers between the various components of the modern financial services industry are crumbling under the effects of the Financial Services Reform Act of 2001. Rather than separate silos of narrowly defined interests, enterprise-wide risk management is the new world order. Companies have created a new executive position, corporate chief risk officer, as someone who can evaluate and supervise all the risks a modern company faces. Actuaries see themselves, their analytical skills and rigorous thought processes, as a perfect fit for this brave new world. The question is, do their potential employers? Suddenly, actuaries find themselves competing with MBAs, accountants, economists, financial engineers, certified financial analysts (CFAs) and numerous others for these important new positions. What do actuaries bring to the table that these others don’t? Do employers have an accurate understanding of the actuary’s position in the new financial landscape? Or are their perceptions based on misunderstanding and stereotypes? What Actuaries Are Up Against To attempt to answer these questions, the Society of Actuaries (SOA) recently conducted two rounds of research that evaluated perceptions of employers and potential employers of actuaries, as well as the same perceptions among actuaries themselves. In addition to the recent surveys, the SOA reviewed 17 years of research conducted by actuarial organizations. This extensive effort (sponsored by the SOA’s Strategic Planning Committee) was performed to see if employers harbor negative preconceptions about the actuarial profession and if the market’s view of actuaries is in alignment with how actuaries view themselves. Were the two in agreement, or was there a substantial disconnect? The answers were somewhat surprising. In the 2003 SOA surveys, respondents were asked if the profession faced more or less competition from related professions than in the past. There was agreement from both actuaries and employers of actuaries that there is more competition than ever today. While MBAs, certified financial analysts (CFAs) and other risk management professionals are encroaching, to some degree, on traditional markets, actuaries are competing with these same professionals as they seek to enter nontraditional areas, such as the broader financial services market. This situation will continue to evolve as actuaries advance in new markets. And advance they have. From 1990 to 2002, the number of SOA members working for banks and investment advisers has grown at an annual rate of 15 percent. These pioneering actuaries, working to establish beachheads in new markets, need to be armed with as many weapons as possible to ensure their success and, by extension, the profession’s. If actuaries’ role in traditional areas is shrinking, it’s even more important for the profession to support these pioneers in new territory. Meeting Market Needs Remaining relevant in today’s marketplace—in either traditional actuarial positions or new markets—requires that employers view actuaries as possessing the right skill sets for the positions they’re trying to fill. In the 2003 member survey, respondents were asked to rate actuaries on 18 specific skills and characteristics (ranging from quantitative analysis and complex problem solving to business communication skills and overall business acumen). For each attribute, they were asked to separately rate actuaries’ performance and the need for improvement. At the same time, the market survey asked employers to rate the performance of actuaries versus “others typically employed”—competitors—on the same set of attributes. Actuaries rated core actuarial skills such as “quantitative modeling” and “solving complex problems” high in performance and the need to improve these skills as relatively low. Employers rated actuaries’ performance the highest in “being ethical,” “quantitative modeling,” “solving complex problems,” and “financial assessment and reporting.” The good news is that both sides seem to be in relative agreement on the strengths of the profession—an opportunity for actuaries. “While the profession has many strengths, there is still a need for improvement,” says Parmenter. “There’s great potential for actuaries, according to the research. Our strength in quantitative modeling and solving complex problems is clear, and this is a skill the market needs, especially in an ever-changing and evolving environment. We need to leverage this strength and show new-market employers that the actuarial skill set applies to their business issues. Actuaries can help grow a business, manage the business and shape the future of the business.” Both actuaries and employers agree that the profession needs to improve in the same four skills: business communication, ability to focus on the big picture, business acumen and being proactive. Business communication was identified by both groups as the top issue needing improvement. Further qualitative research, as well as substantial anecdotal evidence, validates this data. Countless times during discussions with top executives it has been pointed out that actuaries—as a whole—are less and less involved in the senior decision-making process. When asked why this is the case, business leaders overwhelmingly point to the same reason—a perception that actuaries aren’t skillful in communicating the knowledge they have. Actuaries will become marginalized if they cannot convey the key business implications of their analyses to senior management. “Businesses today need individuals who can process a rapidly evolving environment and provide thought leadership to help advance business opportunities,” says Mary Frances Miller, president of the Casualty Actuarial Society. “When compared to competing professionals, the market is saying that they think actuaries should be thought leaders to their business issues. The market doesn’t look to the MBAs, CFAs, accountants or any other profession to provide this thought leadership. Actuaries are perfectly positioned to be the thought leaders in the area of managing risk.” But reviewing the profession itself isn’t sufficient; we must also understand with whom we’re competing. Within the data analysis, employers scored competing professionals highest on intellectual agility, being proactive, reliably getting the right solution, being a team player and being ethical. The competition scored lowest on risk management, industry knowledge, being bold, taking informed risks and being an adviser. Being an adviser, i.e., providing thought leadership, was again shown as the actuaries’, not the competing professionals’, forte. With regard to business communication, competitors were rated substantially higher. Thus it appears that the competition is strongest where the actuarial profession is weakest. Employers in the broader financial services market rate actuarial performance in a very similar manner as traditional employers. However, they rate actuaries with an even lower score than traditional employers in business communication, business acumen, focusing on the big picture and innovative thinking—a factor that would seem to predict even greater challenges to actuaries looking to advance in this booming area. “The days of actuaries’ being content to talk just to each other, using impenetrable jargon, are over,” says Lautzenheiser. “We need to rethink and change the entire actuarial culture. We are not our audiences. Others are! We need to find ways to share our knowledge, expertise and thought leadership with the world.” Credential Value Consistently, members of actuarial organizations report how important the “value of the credential” is to them. How valuable are actuarial credentials to employers? In the survey, employers were asked to identify the three primary credentials they look for when hiring professionals to help their organization manage risk in all forms. In this area, there’s a dramatic split between traditional employers and employers in broader financial services markets. In the traditional markets (insurance, reinsurance, and consulting), a large majority of employers consider an actuarial credential when hiring risk professionals. In the newer fields, however, actuarial credentials are still not recognized. In the broader financial services market (nontraditional markets), the majority of employers look for a CFA and MBA, though the financial risk manager (FRM) and advanced degrees in finance also rank above actuarial credentials. Our research indicates that this is due, in part, to the images associated with the competing professionals. MBAs are often viewed as well-rounded professionals, capable of applying their skills and knowledge to a wide range of business problems, whereas actuaries are sometimes viewed as analytic and numeric and not able to “see the big picture.” Being aware of this perception, many actuaries are acquiring additional education following their attainment of the ASA or FSA designation. In the 2003 member survey, nearly 20 percent of respondents indicate they’re currently seeking a non-actuarial credential or intend to do so within the next two years. Of those individuals, most are seeking either an MBA or the CFA designation. Survey responses from those pursuing an MBA indicate that the chief motivations for attaining this credential are improved business skills, expanded career options and the sheer value of holding a more widely recognized credential. The motivation for pursuit of the CFA designation is quite similar. Going Forward The problem has been defined. What’s the solution? The survey results were recently reviewed with the Council of Presidents and esidents Elect (COP/COPE) of the actuarial organizations in North America. Leaders of these actuarial organizations are in complete agreement that some action must be taken. “We’re a strong profession,” says Lautzenheiser, “with many individuals who can help solve problems at many levels. This is true not only for employers but also for the public. We simply must do a better job of communicating to these constituents, so that they see the value we can provide.” Crowder agrees: “In order to improve the image of the profession, we must consider an integrated plan, which addresses many of the elements identified in the recent research. There is no question that our image as a profession is in need of change. And there is no question that we can no longer rest on our quantitative strengths; the market expects more of actuaries. Improving skills to help businesses through thought leadership and business acumen is important. Once we have put in place initiatives to improve these skills, we will also need to start selling the profession and the unique set of integrated skills that actuaries bring to business situations. And perhaps most important, we need to all work together—as a profession—to accomplish these goals.” While the research points out some sobering truths, and certainly indicates a call for action, the news is not gloomy. There are challenges ahead, but actuaries—if they choose to do so—can have strong input into how their image is promoted and advanced. “The profession is still highly regarded,” says Parmenter. “But we can’t assume that this regard will continue. We’ve seen that in the blink of an eye, a profession can fall from grace. We, too, are vulnerable to this possibility. But if we keep our focus on continual improvement and advancement of our profession,we will remain vibrant and relevant.” By addressing the “image issue,” the actuarial profession will be able to continue not only to maintain its relevance but also to expand successfully into new markets. This process will certainly not happen overnight but will be the work of a committed, ongoing effort. If successful, perhaps it will even mean the end of the traditional “actuarial jokes” so commonplace today and the arrival of a whole new image. Sarah J. Sanford is executive director of the Society of Actuaries and Michael L. Kaster is senior vice president, product and risk management, Conseco Insurance Companies, Carmel, Ind.

About actuaries: How to increase awareness about actuarial science. A student's point of view by Jeremy Lee As a by-product of today’s media-saturated culture, stereotypes about the actuarial profession abound. Films such as “About Schmidt” and “Along Came Polly” perpetuate a clichéd image of actuaries, leaving the public largely uninformed about actuarial science. To outgrow this antiquated image, which could potentially stifle the advancement efforts of our profession, it is vital that measures are taken to increase awareness of actuarial science in the general public and in the financial community. To address this need, the Society of Actuaries will be launching a campaign this fall that aims to educate business and society about the actuarial profession. In order for our profession to thrive in the face of increasing consolidation in the insurance industry and the shrinking availability of traditional jobs, we need to expand its definition and scope. Through innovation, a path can be forged for actuaries to take on a greater role in the financial community. However, for this to be achieved, employers and recruiters in business and industry must be convinced that actuaries can credibly fill these roles. To attain this goal and simultaneously foster innovation within the profession, the marketing campaign should promote actuaries as not only being experts in the field of insurance, but also as professionals with a potent mix of technical skills and financial insight; emphasis must be made on specific actuarial skill sets that are significant to areas as broad as investments, financial risk management and quantitative finance. As it is essential that the actuarial designation command specific and meaningful value to employers, an effective form of marketing could take the form of an advertisement showcasing an actuary who has succeeded in investment banking by applying his actuarial skills. Another key approach to developing an actuarial presence in financial areas is to encourage actuaries in managerial positions working in nontraditional fields to champion the hiring of fellow actuaries. By working alongside other professions and promoting an interdisciplinary approach, non-actuarial finance professionals will be able to form an accurate perception of the actuary’s capabilities. At the same time, consultation, communication and cooperation between different fields cultivate a diverse and highly interactive working environment. In addition, actuaries should establish a stronger presence in renowned industry periodicals through the publication of reports or articles on broad financial topics. This will promote the image of actuaries as being strong developers, innovators and communicators of novel and technically sound approaches to financial issues. In order to determine the most appropriate niche for actuaries in the financial community, we should obtain feedback from industry leaders to enable us to gain a greater understanding about their perception of actuaries. Through questionnaires, financial leaders can convey the specifics of what they require in financial professionals, and actuaries can in turn improve areas of perceived weakness or realize the need to promote certain skills more effectively. Effective marketing requires considerable strategic planning before implementation. Clearly, we need to position ourselves as highly capable in broad financial areas and convey a unique sense of who we are and what we do. In order for the campaign to be successful, it should engage not only external advancement strategies, but also undertake an internal approach by seeking the input and support of actuaries themselves. Before the campaign is launched, it is crucial that significant internal dialogue be conducted, especially among executives and actuaries in managerial positions. We must ensure the presentation of a consistent and united front to industry representatives and the media, taking care to prevent a lack of vision from diluting the impact of the campaign. Thus, it is important that we foster a sense of community and develop common goals for the future of our profession. To be successful, we need actuaries who are willing and eager to exemplify the messages presented in the campaign. Dispelling the image of the actuary as a poor communicator who works only with numbers and a calculator is the first step in strengthening our profession’s image. In a society in which the actuary is often misrepresented, elevating the image of our profession is imperative to securing opportunities outside of traditional actuarial work. As the future direction of our profession hinges, in part, on the effectiveness of our efforts to increase awareness of actuaries, we must be vigilant in developing and maintaining the image of a dynamic and innovative profession. Select a new article		Jeremy Lee is a fourth year actuarial science student at the University of Waterloo in Waterloo, Ontario, Canada.