Professionalism
Darryl Wagner
Chairperson, Asia Subcommittee
IAA Fund Regional Seminar
Bangkok, Thailand
November 7, 2015
Agenda
• Components of Professionalism
• Embracing Professionalism
• Case studies
Components of Professionalism
Professionalism can be viewed in many dimensions. In this
presentation we will view it in terms of qualification, guidance,
and accountability.
Professionalism
Accountability
Component of Professionalism:
Qualifications
Question: Am I qualified to do this work?
Excerpt from the U.S. Code of Professional Conduct Precept 2: “An
actuary shall perform Actuarial Services only when the Actuary is
qualified to do so.”
Types of Qualifications
Basic
Education
Continuing
Education
Work
Experience
• Undergraduate/Graduate Degree
• Actuarial Designations
• Trainings, Seminars, Conferences
• Professional Development, Webinars
• Current Roles
• Past Roles and Experiences
• Code of Professional Conduct
Awareness of
Professionalism
Resources
• Qualification Standards
• Disciplinary body
Component of Professionalism: Guidance
Question: What guidance do I have in doing my work?
• Legal requirements
• Accounting, regulatory frameworks
• Actuarial Standards of Practice
• Code of Professional Conduct
• Peer Reviews/Discussion
• Management/Client expectations
Component of Professionalism:
Accountability
Accountable: “Required to explain actions or decisions to someone”
Individual Accountability
• As individuals, we are accountable to the
organizations that we are involved in.
• Employer
Organizational Accountability
• As actuarial organizations, we are accountable to
the public.
• U.S. example-Precept 1 of the Professional Code
of Conduct:
• Client
“An Actuary shall act honestly, with integrity and
competence, and in a manner to fulfill the
profession’s responsibility to the public”
• Stakeholder
• Professional organizations
• U.S. example-Precept 10 of the Professional
Code of Conduct:
“An actuary shall perform actuarial services with
courtesy and respect and shall cooperate with
others in the Principal’s interest.”
Resources:
Disciplinary
Body
Peers
Mentor
Family &
Friends
Components of Professionalism: Timeline
On a project, the components of professionalism are sequential. But in
the career of an actuary, the clock is never off.
Project
Standpoint
Qualification
Guidance
Qualification
Career
Standpoint
Guidance
Accountability
Accountability
Embracing Professionalism
Triggers/Pitfalls
Change in Methodology
or Assumptions
Management/Client
Pressure
Conflict of Interest
Between Financial Gain
and Proper
Performance
Misrepresenting One’s
Abilities
Financial Constraint
such as Meeting Target
Time
Constrains/Deadlines
False Representation of
Products or Services in
Marketing
Conflict of Interest
Such as in a Merger or
Acquisition
Working for Multiple
Clients
Witnessing Breach in
Code of
Conduct\Actuarial
Standards of Practice
Identification of
Material Errors or
Mistakes
Interpretation of
Evolving
Regulations/Laws
Embracing Professionalism
Avoiding Pitfalls
1. Look in the Mirror Test
2. Code of Professional Conduct &
Actuarial Standards of Practice
3. Talk to Fellow Actuary
4. Talk to Disciplinary Body
Disciplinary bodies not only investigate possibly breaches of the Code of Conduct,
but may also important resources for guidance on professional issues.
Ethical Situation #1
If a charity organization sends you free cookies,
and you don’t make a contribution, is it okay to
eat the cookies?
Ethical Situation #2
Is it fair to move to a better (open) seat at a
sporting event or concert?
Ethical Situation #3
If you make an illegal play in a sporting event
and the referee doesn’t see it, should you act
like it never happened?
Case Study #1
Situation:
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Bill, a Senior Manager at a consulting firm, has been hired to perform Appointed
Actuary work for a client, and is putting together the actuarial opinion.
His consulting firm has been performing this work for the client for many years. Tim,
the actuary who performed the work last year, has been promoted to Partner at the
firm. Bill has a close working relationship with him as they had worked together on
multiple projects in the past.
As part of due-diligence, Bill reviewed last year’s opinion prepared by Tim. While
doing so, he realized that the Tim forgot to include a significant amount of incurred
but not reported (“IBNR”) reserves in the final reported figures in the previous year
opinion. Therefore last year’s reserves appeared to be understated by around 5%.
After looking into the error further, Bill realized that Tim failed to include IBNR
reserves consistently in all prior years’ opinions.
Since the reserves were understated by 5%, including IBNR reserves in the current
year would likely cause a spike in the trend analysis, and would make the error
obvious to all reviewing the report.
Case Study #1
Discussion Questions:
1. What should Bill do?
2. Who should he talk to first and what questions should he ask?
3. What are the implications of each potential action?
4. What components of Professionalism does this situation highlight?
5. Which pitfalls of Professionalism best describe this situation?
Case Study #2
Situation:
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Jane is an actuarial manager working at a mid-size insurance company. She is
responsible for new business forecasting.
Jane recently finished developing business distribution assumptions for a new
Universal Life (“UL”) product, introduced by the company last year. The product did
not sell as well as expected and Jane had to reduce, previously optimistic, sales
assumptions for future years. She produced new business projections for this UL
product and summarized them in a report delivered to Anthony, company’s CFO
and Jane’s boss, who is not an actuary.
Anthony calls Jane into his office, and opens his discussion with: “Listen Jane, I think
your UL new business projections are too conservative. If our sales projections are
this low, we may lose some of our distribution agents to our competitors. Why don’t
you increase the new business sales by 10% for the next 5 years across the board to
have a more optimistic forecast? Just work your actuarial magic.”
Jane is perplexed with Anthony’s request. In her career, she has never been asked to
change her assumptions without sound justification.
Case Study #2
Discussion Questions:
1.
2.
3.
4.
5.
What should Jane respond to Anthony?
Where do Jane’s responsibilities lie?
What are the outcomes of Jane’s potential actions?
What components of Professionalism does this situation highlight?
Which pitfalls of Professionalism best describe this situation?
Thanks.