Chartered Actuary: a message to students

13. November 2024 · Write a comment · Categories: Actuarial, Professions, Regulation

I last talked about Chartered Actuary status here two years ago when the Institute and Faculty of Actuaries (IFoA) set out how they had decided to introduce it. I focused then on what we needed to do to make this a change worth making: like offering roles for actuaries on completion of core practice modules; not necessarily insisting on further actuarial specialisation as a requirement for senior roles within firms; getting comfortable with a much wider range of specialisms amongst those we consider to be actuaries. Some were already doing this then, but most of us have still not travelled very far in this direction. And I note that the Route to Becoming An Actuary still features a diagram where an IFoA Associate is shown as a milestone on the way to the final destination of becoming a Fellow.

But the fact is that Chartered Actuary status has finally been launched this week. I am a retired actuary now but I have claimed chartered status nevertheless because it is a designation I very much think needs to be supported. However ultimately the success of it will not depend on employers or even the profession itself, and certainly not on retired old duffers like me. It will depend on students now and in the future. Therefore, in the unlikely event that any actuarial students are reading my blog, I am addressing this piece directly to you.

Whether you are a student who, like most actuarial students, started work with no or perhaps just one or two exam exemptions, or a graduate from an actuarial science undergraduate programme with most or all of the core practice exemptions, this means that the barriers to you starting to take your actuarial career off in the direction you want it to go in and think the world needs just got a bit easier to jump. If you are a graduate from some actuarial MSc programmes or even possibly a single qualification like the MMath in Mathematics and Actuarial Science at the University of Leicester (last plug for my former employer, I promise), you may be able to claim Chartered Actuary Associate status already.

Using it may not necessarily be so easy, particularly in the early years. Some employers may be resistant to the new designation. But if you are planning to join the profession to make a positive difference in the world, and that is in my view the best reason to do so, then you are going to have to shake a few things up along the way.

Perhaps there is a type of actuarial business you think the world is crying out for but it doesn’t know it yet because it doesn’t exist. Start one.

Perhaps there is an obvious skill set to run alongside your actuarial one which most actuaries haven’t realised would turbo-charge the effectiveness of both. Acquire it.

Perhaps your company has a client who noone has taken the time to put themselves in their shoes and communicate in a way they will properly understand and value. Be that person.

Or perhaps there are existing businesses who are struggling to manage their way in changing markets and need someone who can make sense of the data which is telling them this. Be that person.

Whatever you decide to do, do it with a chartered actuary designation, whether associate or fellow, as a badge that you are prepared to look beyond traditional ways of doing things and, where the historical way of doing things is obviously no longer working or could clearly be massively improved, do the hard work of rethinking things from first principles if necessary. If you do it right, this can be seen as a badge for actuaries who are both rigorous and flexible in their thinking. If that happens, the chartered actuary designation will flourish and it will also be of maximum benefit to you too.

So now it is up to you what becomes of Chartered Actuary status. I am really looking forward to watching what you do with it!

Changing my social infrastructure

04. June 2024 · Write a comment · Categories: Actuarial, Cartoons, Professions

Posted on LinkedIn on 4 June 2024

This is just a quick personal note to explain the imminent end of my LinkedIn account.

LinkedIn became an important tool for me in 2014 when I became a Lecturer at the University of Leicester and Programme Director for the BSc Mathematics and Actuarial Science there: to connect with potential students and guests to the university, to link up with former students, to publicise the activities of the Leicester Actuarial Science Society and to facilitate a professional network which would be useful to our current and former students. I also posted a few articles here along the way. However I will be leaving the University of Leicester on 30 June and moving to retired status with the Institute and Faculty of Actuaries soon afterwards. Therefore the description I have given myself here (Actuary, Lecturer and Writer at the University of Leicester) will at that point become almost entirely untrue! It therefore seems like an appropriate time to wind up my account here.

According to the latest analytics, I have around 1,400 connections on LinkedIn. Thank you to everyone who has connected with me over the years, particularly if we worked together in some capacity. I have managed to work with some wonderful people over the last 10 years. A particularly big thank you to all of the students who have made the job so enjoyable during that time.

Of those 1,400 connections, over 400 of you list the University of Leicester in your profiles. If you are a current or former student, or indeed anyone who needs to be in contact with a member of the Leicester actuarial team and are currently only connected to me, you should ensure that you are connected to at least one of the following excellent colleagues of mine: Leena Sodha, Paul King or Nigel Sell. You should, in addition, as a current Leicester student, join the LinkedIn group Leicester Actuarial Science Society. If you are a former Leicester student, the group you want is Leicester Actuarial Science Society – Alumni.

I will continue to be in various actuarial WhatsApp groups for the time being and on X (@weknow0). And, if you like any part of what I write, you can always subscribe (for free!) at weknow0.co.uk. For those of you who still want to keep in touch with me by email once I have left here and my Leicester email address has been discontinued, and we have not already shared alternative contact details, please send me a message on LinkedIn (or weknow0.co.uk) and I will be in touch.

With my best wishes for the future to you all.

Horizon and its implications for us all

11. January 2024 · Write a comment · Categories: Actuarial, Cartoons, Legal, Prediction, Professions, Regulation
Copyright ©Steve Bell 2009/All Rights Reserved e.mail: belltoons@ntlworld.com tel: 00 44 (0)1273 500664. Reproduced by kind permission of Steve Bell https://www.belltoons.co.uk/bellworks/index.php/leaders/2009/2913-16-10-09_BOINGUSES

We have been here many times before, even in recent memory. The 2008 banking crisis, memorably immortalised by the Steve Bell cartoon above; the MPs’ expenses scandal the following year; the successive disappointments of Brexit; and now the the Post Office Horizon scandal. All of these had in common an initial public expression of outrage, followed by loud condemnations of aspects of it from within the Establishment, followed by a series of measures which generally failed to change anything substantive. So the ring-fencing legislation brought in to isolate the risk taking within banking from retail customers has steadily been lobbied against and is now gradually being unravelled. MPs continue to have expenses scandals. I don’t know how to encapsulate in a sentence the Muppet Show of how the Establishment has been trying to deal with Brexit since 2016. And now this.

The Post Office scandal seems to be being discussed everywhere: beyond the TV, radio and social media, it is in the pub, the supermarket queue, in families and workplaces. The Establishment condemnation is already underway, as pithily summarised by Marina Hyde here. I do not really care about the implications for the honours lists, but very much hope that the sub-postmasters and sub-postmistresses get the compensation they are seeking. However this time the response cannot stop there.

As David Allen Green has written in Prospect today (with a great overview of what has happened from a legal point of view), the scandal also represents a failure of the legal system. This was partly caused by the repeal, in 1999, of the part of the Police and Criminal Evidence Act 1984 which presumed in favour of individuals rather than computer systems. This has been particularly unfair in these cases as the evidence defendants needed to show that Horizon was at fault often remained undisclosed by the Post Office. It was also caused by the Post Office’s eagerness to pursue private prosecutions.

Coincidentally, I came across the concept of private prosecutions a couple of weeks ago while reading the excellent Butler to the World: How Britain became the servant of tycoons, tax dodgers, kleptocrats and criminals by Oliver Bullough (which also suggested to me that I should revisit the issue of Scottish Limited Partnerships soon, but I digress). As Oliver points out:

Under measures introduced in the post-2010 austerity agenda, defendants…have no prospect of reclaiming their expenses from public funds if they are convicted. Even if they’re acquitted, they can only get their expenses back if a request for legal aid has previously been turned down…Meanwhile, private prosecutors – whether individual or companies – can claim back all reasonable expenses if they lose. Financially speaking, a private prosecution is a one-way bet. As long as you can afford the upfront cost of bankrolling the case, you’ll get your money back because under common law you are acting on behalf of the Crown.

David Allen Green has called for private prosecutions to be abolished, which I would agree with. But I also think the burden of proof needs to be returned to the operators of computer systems in what I predict will become increasingly frequent human-expert system disputes in the future. In fact we need to go further than that and have a full public consultation into what legal protections individual humans will need in a world increasingly driven by decisions and calculations made by non-human systems.

Over seven years ago I wrote an article in response to Cathy O’Neil’s excellent Weapons of Math Destruction, where she set out the case against devolving important decisions to mathematical models without adequate feedback loops. I said then (with an Oppenheimer reference too!) that:

If mathematical models are to be the dominant regulatory tool of a financial world, and of the consultancies and financial firms competing in that world, then the time will come when mankind will curse the names of the highly paid professionals who followed inappropriate rules rather than exercising their own expert judgement when it mattered.

It is starting to look like we may be there already unless we act fast.

Chartered Actuary: I am still very confident that this is a good idea

07. September 2022 · 6 comments · Categories: Actuarial, Cartoons, Professions, Regulation, Risk

I originally talked about Chartered Actuary status (here, with the cartoon above) when the Institute and Faculty of Actuaries (IFoA) first proposed the idea and set up a consultation in 2018. I said then that sometimes an idea comes along that seems so obviously good that you wonder why it hasn’t been done a long time ago.

Four years on from the retreat from the proposal following the slenderest of straw polls offering some challenge, and it remains a good idea. There are still relatively few full actuarial roles available for associates and many firms still assuming a default career path of continuing to fellowship.

There are some differences this time however:

  • There will be two chartered actuary designations: Chartered Actuary (Fellow) and Chartered Actuary (Associate), with the hope that the FIAs who were most concerned with maintaining their distance from AIAs last time will now support the proposal. The original proposal suggested Chartered Actuary (CAct) would be a single distinct qualification, a required qualification point for all student actuaries to reach before going any further and globally recognised as the generalist actuarial qualification from the IFoA. This approach has been abandoned, with no requirement to complete the core curriculum before tackling specialist modules. It will be interesting to see whether Chartered Actuary (Associate) will be seen as a destination in its own right, or just a change of letters. This will depend on all of us within the profession (see below).
  • The environment we are operating in has certainly changed, with the replacement of our regulator, the FRC, by the Audit, Reporting and Governance Authority (ARGA). One of the concerns that the IFoA were looking to address in 2018 was that another, much larger, profession, could pose an existential threat. If actuaries have a unique skill set, which is likely to be lost to a wide range of businesses and other sectors if it is unable to meet the demand for those skills due to a simple lack of numbers, then the need to take any perceived barrier to practise away from our emerging young professionals is clear. The move from FRC to ARGA does not remove this threat and there also remains in the regulatory proposals to date the threat of differential regulation, where actuaries are regulated more heavily than other professionals doing similar work could price us out of markets where we have value to add. The profession therefore needs to grow to increase our voice and influence over the future regulation of the profession.
  • We have acknowledged the impact of the Great Risk Transfer within the finance sector, but in my view the impacts more generally of the increased individual risks and uncertainties millions of the UK population face as energy, food and housing costs escalate need to be faced up to by our profession. For that we need to continue to be a destination of choice for a growing number of your people with a widening range of backgrounds and experiences.

So what do we need to do to make this a change worth making? We need to start behaving like a generalist actuarial qualification is what we want, and offering roles for actuaries on completion of core practice modules in future. It will mean not necessarily insisting on further actuarial specialisation as a requirement for senior roles within our firms. It will mean getting comfortable with a much wider range of specialisms amongst those we consider to be actuaries. Some are already doing this, but most of us need to go much further. A good place to start might be the IFoA’s own website, where the Route to Becoming An Actuary still features a diagram where an IFoA Associate is shown as a milestone on the way to the final destination of becoming a Fellow.

Fighting for meaning

24. July 2021 · Write a comment · Categories: Cartoons, Professions

I recently finished reading an excellent book about how to read Russian short stories: A Swim in a Pond in the Rain by George Saunders. Of course it is about much more than this, drawing on George’s 20 years of experiences of teaching a creative writing course at Syracuse University and his own writing experience (primarily a short story writer, he won the Booker Prize for his first novel in 2017: Lincoln in the Bardo. It has caused me to think more deeply about my teaching (I teach some mathematics, economics, professional skills and communication skills) as a result. The two pages where George talks about finding his literary “voice” are, for me, worth the price of the book on their own – I never really understood how critical this was and why noone I had read had talked about it in very clear terms before. I can also, at long last, see the point of literary criticism. This book is all about the fight for meaning, and a bare-knuckled fight it is at times.

I think finding your own voice can apply in any field, not just the creative ones. George describes realising that he did not belong on Hemingway Mountain and the process of finally accepting his own “Shit Hill” with huge power. But at least as a writer you know you are supposed to be finding your own distinct way of writing. I sometimes think that, in many professional careers, this is not widely encouraged.

However it is, in my view, massively important. Finding your voice in a professional career is about discovering what you are good at and what you are interested in and trying to bridge the gap between the two. It is about being prepared to learn from those around you, although not necessarily the thing they think they are trying to teach you. It is about being prepared to spend time, sometime considerable time, on mastering things which are important to you, even if they seem to have no importance to anyone else. In this way you will develop an independent professional career where you have something interesting to say in your chosen field.

This may sound very utopian to some, particularly those in the early years of a career where you may have little control over your workload or the structure of your working day. However that will not be the case for ever unless you choose it to be and, provided you do not lose the habits for finding your own voice in the meantime, the opportunities to do so will only grow.

What you may have gathered from this is that I see finding your voice, not as some quick process that takes place over a short period at the start of your career (at least not in the pursuits I have been involved in so far), but as a lifetime’s search. Mine didn’t really start until I was 40 and, health willing, will carry on for many years to come (I still have no real idea what my voice as a writer is yet).

Let’s all wish each other good luck on the quest!

Now and Venn

28. March 2021 · Write a comment · Categories: Climate Change, Economics, Professions

Diagram 1

We are currently behaving like this is the world we live in – because if you are a finance person it is. The Dasgupta Report on the Economics of Biodiversity does nothing substantive to challenge this, despite a foreword from David Attenborough admitting “We are totally dependent upon the natural world”, other than putting a bigger number on the Sustainability portion (Natural Capital). John Kay mentioned in his talk, as part of the Dr Patrick Poon Presidential Speaker series on Finance in the Public Interest for the Institute and Faculty of Actuaries, the habit of actuaries in particular of often “attaching meaningless numbers to data”. There would seem to be great potential for doing precisely this in putting a number on Natural Capital.

But it is worse than that. As the September 2020 InfluenceMap report on sustainability finance policy engagement makes clear, most financial institutions (bottom-right quadrant, in blue, below) have shown caution and, despite having made some high-level supportive comments, have tended not to engage in a detailed or intensive manner. A small number of financial institutions (top-right quadrant, blue) have been actively engaged in promoting sustainable finance policy. A few financial institutions (centre-left of the diagram, blue) appear to be more cautious about sustainable finance policy.

This chart plots the results of InfluenceMap’s analysis for the financial institutions and industry associations included in the analysis. Engagement Intensity refers to how actively the entity is engaging, while Organization Score measures the degree of support/opposition to policy.

Diagram 2

In the meantime, the IFRS Foundation is proposing to set up a Sustainability Standards Board with its own reporting standards. This is what Richard Murphy (who got me thinking about this in Venn diagram terms originally) is rightly complaining about as it would lead to this:

His sustainability cost accounting idea offers a plausible alternative approach in my view. As the introduction says: 

…accounting has to change because we need a clear, audited, enforced and unambiguous indicator of the process of change that business must go through to support continued human life on this planet. Sustainable cost accounting can do that by indicating who can, and cannot, use capital to best effect in this changed environment. That is precisely why it is needed, however uncomfortable the consequences might be.

What is actually needed therefore is clearly an approach rooted in this:

Diagram 3

This is the long term position most working in sustainability would, I believe, like to see. However there are differences of opinion in how to get there.

Kate Raworth argues that you may need to talk within Diagram 1 to start with in order to engage the finance professionals, which of course includes the central bankers and treasury official who might limit the speed at which we could move to Diagram 3. Others disagree, saying once you start talking to finance professionals in their own language, you are condemned to a solution in Diagram 1.

What seem clear to me is that, if our arguments are between Diagram 1 and Diagram 3, perhaps we can dispense with Diagram 2.

A-levels, algorithms and pulling up the ladder

06. January 2021 · Write a comment · Categories: Actuarial, Professions

I have written about school qualifications once before here in 2014, when I was criticising the move to adding an A* grade at GCSE and the consequent narrowing of the grade boundaries to mimic the A-level ones. We have of course since moved to a numerical grade system for GCSEs which is even narrower. However, if the exam grade system was a bad way to assess students, the algorithm which replaced it in the summer (explained here and critiqued here) was clearly worse still.

So, against a background of steadily less reliable grade information at both GCSE and A-level, it was interesting to look at the Institute and Faculty of Actuaries’ (IFoA’s) employer directory and note that, of the 25 separate adverts for graduate roles, 11 of them have an A-level or UCAS points requirement in addition to the university degree requirement. My question is why?

I understand that employers, particularly this year, are likely to have very large numbers of applicants and need some way of reducing the number they need to review in detail, but there are many much better sieves than A-levels these days. Psychometric tests can assess how rusty students’ numeracy is. Application forms can be digital and given a computerised first pass on any number of criteria and, if the questions are constructed thoughtfully, will give companies a smaller set of applicants much more closely aligned to their goals than the grade given at mathematics A-level.

Even if you accept the grades as representative, there are clearly issues around social mobility and widening participation from relying on them to exclude a large number of candidates initially, which was highlighted when an algorithm attempted to reproduce the results based on subject studied and school attended. The news today that they will not be trying this again this summer is encouraging, but even if mark allocations are fairer, many problems with A-levels remain.

I have felt that this has been a growing issue for some time – it has always seemed to me ridiculous that a student on my programme (the BSc Mathematics and Actuarial Science at the University of Leicester – a qualification accredited by the IFoA), doing well and on track for all 6 of the core principles exemptions available as a result, still feels the need to retake an A level taken before they had discovered the motivation for actuarial work that they now have, in order to have a chance with many of the top employers. Are those employers so lacking in confidence in the integrity of their own profession’s qualification system that they need the security backstop of an A-level pass?

It is likely to be a tough environment for young people attempting to start their careers this year, whatever their skill set. I hope employers will review their current approach to recruitment and check they are not inadvertently pulling up the ladder before seeing all of the talent available.