President’s message DAve SANDBeRG
From Black Box to Glass House
AS i WRiTe THiS, iT’S STiLL SUMMeR. Yet on my Minnesota street in late August, the first tree already
stands out with its hues of orange and gold leaves. Change is coming once again.
By the time this is published, I will have started my term as
president of the Academy. I have been ably mentored by my immediate predecessors, Ken Hohman and Mary Frances Miller,
as well as taught over the years by countless other volunteers
in the areas of health, pensions, risk, life, and property/casualty
practices. I’m a better actuary because of my involvement in
Academy and SOA projects, but I’m also a better person—and
for that I’m grateful. I look forward to investing my time in the
profession this coming year and to honoring the time and effort
that have been invested by so many others in our past. I’m also
fortunate to work for a company that has supported my past
professional involvement and the time I will need to contribute
to this Academy leadership position.
risk-Pool collaboration and Documentary candor
What is the “franchise value” of our profession? What are the
specialized skills through which we add value for others? I propose that it’s our ability to contribute to the design, reporting,
and maintenance of sustainable pooled risk-sharing arrangements, whether in the public or private sector. While we often
prepare balance sheets, affirm funding status, or defend rate increases, our value is not limited to owning a number-crunching
black box. Our biggest value (whether in public issues like Social Security, Medicare, and public-sector pensions or in private
sectors of life, health, and P/C insurance, corporate pensions,
and enterprise risk management programs) is our ability to prepare our clients or employers so that the promises they make
today are sustainable through the risks of tomorrow.
The Academy supports the profession’s role as the engineer of sustainable pooled-risk programs, and proclaims the
importance of serving the public on behalf of the profession.
We contribute to public policy so that laws and regulations
for pooling of risk include an understanding of sustainable
concepts that benefit all stakeholders. Similarly, our internal
professionalism work seeks, through clear communication and
documentation, to ensure that all stakeholders understand the
benefit of pooling of risk. Such transparency supplements our
seemingly opaque calculations.
This objective can be in distinct contrast to some professions,
in which the expectation is to advocate and advise on behalf of
client self-interest—often with the goal of advancing a larger
client share. The expectation is that the ethics and rules of the
market will allow the best man or woman to win. Yet there’s an
increasing sense among many that this logic falls apart when
disclosure and context are not (or cannot) be communicated.
This is an area that is well understood and frequently addressed in our professional standards of practice. It is through
the major focus on appropriate documentation that our skills
as mediators of engineered collaboration are strengthened
considerably. A key to the continued growth of our professional franchise value is our ability to document candidly for
all stakeholders what the current actuarial assessment means
about tomorrow and how it was derived. Our efforts to ensure
that others understand what we have done will serve the profession as the public and our stakeholders continue to move their
understanding of risk from black box to glass house.
eLeNAMiv / SHUTTeRSTOCk
