As a recently qualified actuary, this is a topic I think about often. I have been fortunate to be exposed to some great actuaries in my relatively brief career, and I consider myself quite lucky to have learnt the game from some very unique characters.
Before I start, let me clarify two things:
- This is my attempt to define the attributes of GREAT actuaries, not the average actuary. It goes without saying that in order to become an actuary, you have to be analytically strong, hard working, good at solving problems and self motivated. These attributes (and others) just get your foot in the door, but they don’t make you special.
- I am 26, and I qualified just over a year ago. Just as I am not the finished article, so is this list not necessarily the opinion I will have once I am more experienced!
So, without further ado, here are the attributes that I believe separate good actuaries from great actuaries.
This is possibly not on any list of characteristics attributable to actuaries anywhere, but I feel quite strongly that this is an important value that actuaries should look to adopt.
While I feel that all human beings should endeavour to be more humble, I have not included this here as a feel good factor. There are very practical reasons that this a beneficial virtue for actuaries to have:
- We live in a changing world, and an actuary is only as good as his or her ability to make assumptions about the future. Overconfidence can lead an actuary to get too comfortable in the assumptions that they set. A lack of humility arguably led to the credit crisis in 2008. Hindsight bias and confirmation bias are both rooted in arrogance.
- Treating Customers Fairly requires actuaries to design products that consider the expectations of the policyholders. I see far too many benefits that have been designed that will mislead policyholders – and the buck stops with the actuary who developed those benefits. We often don’t think about the very person we are designing these products for and make brazen assumptions about how our benefits will be interpreted.
Ultimately, when working with risk, the riskiest thing you can do is fail to admit “I don’t know” when you don’t know.
2. Good communication skills
This is by no means a recently noted quality for an actuary to have. At the ASSA convention last year there was an excellent presentation that showed that a number of actuaries have realised this.
While the profession is improving on this by requiring actuaries to pass the Communications exam (It is still one of the least passed exams), we as actuaries need to constantly strive to improve our communication skills. The days of an actuary speaking a seemingly different language to a non-actuarial audience are over. An actuary needs to be willing to explain any actuarial concept, with an approach tailor-made for the person they are addressing. Great actuaries never hide behind jargon!
This tends to be an area more lacking in younger actuaries, but it is an area all actuaries need to consider. We often work in ivory towers, very far away from the coal face of where policies are sold. We need to allow for the fact that sometimes:
- The information that we would like in order to price benefits is not practical to collect
- We have to make do with less than perfect data
- The well meaning theories we learn in varsity don’t fit the problems we are dealing with
Balancing the theoretically correct approach and the practical approach is intertwined with an actuary’s ability to exercise good judgement. Knowing when to cut corners and when not to is an important skill for an actuary.
This attribute may seem at odds with the first attribute, but an actuary who is not confident is always going to struggle to make their mark. We make assumptions for a living, and as such, there is often no single right answer. If you don’t have the confidence to sell your approach to a problem, your approach is probably not the approach that will be used.
More importantly, actuaries are often in the minority where they work and they will be put under considerable pressure to price aggressively or allow benefits that are too risky to be developed (especially by sales staff). In these situations the actuary needs to stand firm and develop products that are in everyone’s best interest.
The most important skill for any actuary. We are thrown into a myriad of different situations with different problems, each requiring its own solution. While it takes years of experience to develop excellent actuarial judgement, the better actuaries seem to be able to demonstrate this very early on in their careers. Great actuaries are able to see the whole problem in its entirety and from everyone else’s perspective, and develop well thought out and practical solutions.