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President’s Message BOB BEUERLEIN
Developing a Game Plan
FOOTBALL SEASON IS UPON US. Whether you are a football fan or not, you have probably noticed
differences in people’s weekend habits in recent weeks. Whether it be neighbors wearing the colors of
the local team, college alumni preparing to tailgate at a Saturday football game, or friends gathering
around a big-screen TV on Sunday to watch the NFL, a new season of the American culture has arrived.
And while the underlying rules of the game of football are the same for each team, no two teams use
the same strategy to develop and execute their game plan. While it is a combination of offensive, defensive, and special team plays that determine the outcome of the game, the background and skills of
the players and coaches determine how the game will be played.
When actuaries approach a
new assignment, do we think
about our game plan? We can
think of ourselves as performing
actuarial work within a set of accepted principles and rules. But
how we perform this work may
vary based on our own knowledge
and experience. Whether we are
analyzing new data, designing an
actuarial model, or developing
assumptions for a new calculation,
we should think of ourselves as
professional business people who
are addressing new situations and not as mathematicians who
are applying formulas. I like to say that good actuaries are
typically excellent professional business people that are good
with mathematics and not excellent mathematicians that are
good with business.
We have a Code of Professional Conduct that governs how
we perform actuarial services and actuarial standards of practice (ASOPs) that are intended to provide guidance for dealing
with commonly encountered situations. But, we should also
remember that actuaries should exercise professional judgment
in providing actuarial services. We bring to our work not only
highly specialized training, but also the broader knowledge
and understanding that come from experience. In fact, the
ASOPs frequently call upon actuaries to apply both training
and experience to their professional assignments, recognizing
that reasonable differences may arise when actuaries project
the effect of uncertain events.
I have heard people speculate that the role of the actuary will
be diminished as machines with artificial intelligence “learn”
what we do as actuaries. I agree that there are rules and principles
that need to be followed in working as an actuary. However, with
that said, our ASOPs are principles-based and do not attempt
to dictate every step and decision in an actuarial assignment.
The value that actuaries bring to our employers, clients, and
the public is our ability to use our
knowledge and experience to adapt
to situations and provide expert ad-
vice and professional work. Because
of this, actuaries have earned and
will continue to earn the trust of
the public.
Just as a football team cannot
be effective if it does not adapt its
game plan to conditions that may
occur during the game, actuaries
cannot always address each new
project or assignment in the same
way. The ASOPs allow for the actuary to use professional judgment when selecting methods and
assumptions, conducting an analysis, and reaching a conclusion,
and recognize that actuaries can reasonably reach different
conclusions when faced with the same facts.
In applying professional judgment, actuaries call upon their
knowledge and understanding that comes from their experience.
Having diverse backgrounds in a team of actuaries broadens
this knowledge and understanding when applied to a new
assignment. Just as a football team uses different combinations
of running and passing plays depending on their skills and
experience, so also the techniques and analyses that actuaries might utilize may vary depending on the situation, team
members, environment, and the continued evolution of tools.
So what’s your game plan? Does all of this mean that we
should throw away established actuarial practices and revolutionize the practice of actuarial science? Of course not. Just
as a football team works on the fundamentals of blocking
and tackling, we need to continue to hone our basic actuarial
skills. However, when situations arise, we should not be afraid
to apply our knowledge, experience, and professional judgment to develop our game plan for the assignment. In fact,
it is possible that combining this game plan with the skills of
a professional business person will lead us to a Super Bowl-caliber performance.
