Articles - Where there is risk, there is actuarial opportunity

By Karin Warwick-Thompson, Partner at CTPartners

 It is an old truism that wherever there is risk, there are opportunities for actuaries. Since analysing and managing uncertainty has always been at the heart of the actuarial profession, it is inevitable that our increasingly complex and volatile global economic system is bringing with it new roles for actuaries that lie far outside the traditional realms of insurance.
 Environmental finance, wealth management and financial planning, social security, data mining, health financing – even the climate – these are among the areas which are offering a new generation of actuaries the opportunity to do some ground-breaking thinking that will lay down the foundations for the future of the profession.
 The area of environmental finance, for example, has a natural resonance for actuaries, requiring all the traditional skills of quantitative analysis combined with technical and financial analysis being applied in new ways. For example, modelling skills can be applied to questions of sustainability, exploring issues such as aligning sustainability with capital requirements.
 It is also becoming increasingly important to manage risk arising from natural events. One small group of actuaries – currently perhaps only 100 or so globally – specialize in analysing weather patterns and the implications of climate change.
 With weather patterns continuing to become more extreme (last year being a prime example of the impact climate can have on food production), this is a specialist field that can be expected to expand significantly over the coming years.
 Financial planning is another area undergoing rapid change. With the attractiveness of traditional pension plans on the decline, new forms of wealth management and financial planning will emerge, demanding the application of core actuarial skills to a broader range of wealth management challenges. And here too, actuaries have a great opportunity to show their value through proactivity and input into developing new and innovative products.
 With ageing populations across much of the world, demand from public sector and central government bodies for actuarial expertise to help plan population scenarios is another area that will grow over coming years. Not just in the UK, but across Europe, the US and Australia, governments need to understand how large their population will be in the future, its demographic make-up and the implications of this for the size of the workforce and thus – critically – for the economy as a whole, particularly as regards the implications for health, social security and pensions policies. At CTPartners, we are finding that this is a real growth area for actuaries, particularly around the financial provision of long-term care and it impact on social security.
 For these roles – indeed all roles in these new and emerging areas - the key requirements are flexibility of thinking, a broad mindset and real commercial awareness as well as the ability to adapt to working across cultures. Communications skills, of course, are more important than ever, with actuaries increasingly needing to come out of the shadows and show the gravitas and/or political skills required to work effectively with CEOs other C-Suite executives.
 In general, the younger generation coming into the profession also have a more international outlook and there is more of an international exchange amongst actuaries.
 Twenty years ago, insurance companies were led by actuaries. That is no longer true. Ten years ago the window opened for actuaries to forge ahead out of traditional insurance into risk management, but this opportunity was never really seized. With the new areas opening up to it, the profession now has another chance to lay the foundations for a more strategic future.

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