November 3, 2016
It’s a great honor to stand before you, chosen to serve as the Academy’s 52nd president.
Tom, last year in your inaugural address, you described how we are a link in a chain from the past to the future—a living history of the Academy and of our profession. I want to thank you for the Academy legacy that you, Mary D. Miller, Tom Terry, Cecil Bykerk, David Hartman, Ken Hohman, Jim MacGinnitie, Dave Sandberg, and others too numerous to name have passed down through your tremendous leadership.
I’d also like to extend my public congratulations to our incoming president-elect, Steve Alpert. Steve, I look forward to working with you.
I also look forward to working with my good friends Jerry Brown, the new president of the Society of Actuaries and Nancy Braithwaite, the soon to be president of the Casualty Actuarial Society. I have been friends with Jerry and Nancy for many years and look forward to working with them for many years ahead.
I would also like to thank my wife, Sue, who, though not an actuary, is one of the best ambassadors that the actuarial profession can have.
So we are a living link from the past to the future of our profession. What responsibilities does that place on us as actuaries? What opportunities does it create? What are the implications for the Academy?
Thinking about being the link to the future brings to mind the legend of the Boulder of Sisyphus from Greek mythology. As you may remember, due to some misdeeds, Sisyphus was required for eternity to roll a large boulder to the top of a mountain. But, each time Sisyphus, by the greatest of exertion and toil, attained the summit, the boulder rolled back down the mountain. Similarly, our profession can be thought of as a lifelong effort to acquire and enhance a continuously changing set of skills. As some skills become perfected, other new skill requirements will appear.
This is meaningful as we reflect on how we think about our profession’s future. After all, 50 years ago, who could have foreseen:
- The diverse, emergent roles of actuaries in enterprise risk management, catastrophe modeling, predictive analytics, and other nontraditional areas?
- Or the challenges to public systems and programs threatening their future sustainability?
- Or the paradigm shifts brought on by the Affordable Care Act, life principle-based reserving, the low-interest-rate environment, and climate and terrorism risk, to name just a few?
- Or, how about the development of the robust pillars of actuarial professionalism, and the new pressures, demands, and ethical challenges actuaries face as professionals?
- And in a few moments, we’ll take a deep dive into the history and continuing implications of one of the most significant of those changes, the Dodd-Frank financial reform law, in a couple of minutes when Senator Dodd speaks.
Just as Sisyphus was challenged with rolling a boulder up a mountain, we are challenged with an ever-changing world.
We can’t predict exactly how our profession and the factors affecting it will change. We can, however, be confident of one thing: Change will continue.
While the questions we ask now differ from those we would have asked 50 years ago, the answers remain elusive.
- How will qualifications and professional roles change, not just for actuaries but for para-actuaries and actuaries in yet-unknown roles of the future?
- How will the public policy landscape change after next week’s election and beyond, and what political and regulatory changes outside our borders will affect us?
- What technological changes and new risks will emerge decades from now, even as we struggle presently with Big Data, automated cars, and other new technologies?
- How will insurance regulation and financial risk evolve with new models of shared, unit-based, and on-demand insurance, and virtual financial instruments like Bitcoin?
So many questions. To which, for now, our imperfect reasoning can only guess at the answers.
To get on with our work, rolling the boulder up the mountain and growing as a profession, we can’t and don’t have to be paralyzed by uncertainty. We can accept our limitations, and recognize the good news that we don’t have to be perfect thinkers about the future to meet its challenges and embrace its opportunities.
What we do need is an ability to effectively respond to whatever changes may happen, both on an individual level and as a profession. I believe this means recognizing that the era of actuary as mere technician is over. More than ever, actuaries need to apply advanced business skills and deep understanding of current developments—not just technical expertise—in dealing with clients, stakeholders, and the public.
It has been said that:
“The wisdom of the world resides on bookshelves:
…read by few
…understood by fewer, and
…acted upon by few who read and understand."
Many of us fall into this category of being able to read and understand new concepts, but being reluctant to act on them.
We must challenge ourselves to become more like thermostats than thermometers. In a room, a thermometer is able to precisely inform someone of the exact temperature of the room. But, if the room is too hot or too cold, the thermometer is not able to influence the environment. A thermostat, on the other hand, is similar to a thermometer in its ability to precisely measure the temperature of the room. And, the thermostat is able to influence the temperature of the room by sending a signal to the heating or cooling system if the temperature has varied from the desired level.
We have the ability to be like thermostats in our business environment. By understanding complex issues, we can choose to influence the environment regarding these issues and thus impact the outcome of situations. We must avoid being like thermometers that understand the issues but do not influence the environment with this understanding. We must move the idea of professionalism from an abstract concept to a practical application.
That’s where the Academy comes in. The Academy provides us with the ability to adapt to change and act—in a structured, deliberative, and timely way. The founders of the Academy were truly visionary in understanding that we need an ongoing organization that performs this essential role for the whole profession.
The Academy is the fulcrum of our profession, informed by the past so that we can smartly prepare for the future. We do this through our vital work with policymakers and the vital and fundamental structures for actuarial professionalism established here, and through our interface with members across practice areas and with the public.
The public policy and professionalism questions and changes that the Academy reports on, responds to, and helps shape transcend technical changes in practice. They involve matters of the public interest, ethics, sound policy, evolving norms, and other factors. The Academy is where actuaries in our country deliberate on the big-picture issues and what they mean for successful actuaries and a successful society.
I want to thank each of you for being here—being part of the link to the future of our profession. Your attendance reflects that you already understand the valuable role of the Academy in ensuring a deep and informative connection between actuaries and public policy and professionalism experts.
I look forward to the remaining time we have together here in Washington and to the year ahead. With our committed leadership and volunteers, I am confident that we’ll have a productive year of working together to evaluate and prepare for the changes affecting us. I encourage all of us to continue to roll the boulder up the mountain and to be thermostats, influencing our environment. And I know we’ll do right in the Academy as the living link of our profession by “paying our knowledge forward” to future generations.