In 2021 the UK Institute and Faculty of Actuaries (‘IFOA’) introduced a thought leadership speaker series. The aim of this series is to “help promote innovate thinking, debate and discussion both within and beyond the actuarial profession”. The series covers a wide range of very important topics including sustainability and climate change, the future of the actuarial profession, finance in the public interest, actuarial innovation in the Covid-19 era and behavioural science. The webinars are all recorded and can be accessed by IFOA members here: Thought Leadership Speaker Series | Institute and Faculty of Actuaries. Non-IFOA members can contact firstname.lastname@example.org to request access (free of charge).
These webinars provide a great opportunity to take a step back from day-to-day work and reflect on broader issues which are critical for both the profession and wider society. As examples, two webinars out of the four from the “Finance in the Public Interest” series are discussed further here. Links to these can be found below. These webinars were chaired by IFOA immediate past president (then president) Tan Suee Chieh. He positioned them as conversations about “what needs to change within our financial sector and systems to ensure a more sustainable future for humankind”. Themes covered included purpose and responsibility of the financial sector, sustainability, changes in economic thinking, from “market capitalism” to “pragmatic capitalism”, the role of the professions generally (and IFOA in particular), wicked problems and culture and ethics.
The first webinar in this series was presented by John Kay, one of Britain’s leading economists. His books include “The Truth About Markets” (Allen Lane, 2003) and “Other People’s Money: The Real Business of Finance” (PublicAffairs, 2015). His presentation focused on arguments from his book “Radical Uncertainty” (W.W. Norton Company, 2020), co-authored with Mervyn King. He emphasised the importance of distinguishing between risk (in the probabilistic sense) and uncertainty (where probabilities cannot be attached to potential outcomes). He divided uncertainty into that which is “resolvable”, either from obtaining more information or by applying statistics; and that which is “radical”, where not all outcomes are known, where there may be ambiguity and where the processes involved are non-stationary. From a risk management perspective this is all very relevant. It provides a framework for explaining why it is important not to be over-reliant on probabilistic models; recognising that qualitative analysis, scenario testing and contingency planning tools are just as important (arguably more so) in ensuring a robust and resilient organisation. A key message was to “manage risk and embrace uncertainty”. In this context risk is something that threatens success whilst uncertainty can be a source of opportunity. Tan Suee Chieh suggested that this book should be required reading for the profession. The subsequent challenging discussion debated the role of regulation in both the pharmaceutical and financial services industries, the demise of defined benefit pension schemes, the need for trust in professionals, remuneration culture and the balance between self vs collective interests.
The second webinar in the series was presented by Sir Paul Collier, who is a Professor of Economics and Public Policy at the Blavatnik School of Government and a Professorial Fellow of St Antony’s College. His books include “The Bottom Billion” (Oxford University Press, 2007), “The Plundered Planet: How to reconcile prosperity with nature” (Oxford University Press, 2010) and “The Future of Capitalism: Facing the New Anxieties” (Penguin Books, 2018). He spoke on themes from his latest book “Greed is Dead: Politics After Individualism” (Penguin Books, 2020), co-authored with John Kay. He noted recent research across multiple disciplines indicating how important community is for human beings, making us very different from the rational decision makers of modern economic theory. He argued that a good organisational culture encourages a sense of community via defining a common purpose and allows individuals autonomy in deciding how to achieve that purpose (“decentralised agency”). He heavily criticised current financial services regulation (and indeed the Actuarial profession’s role in it), as inappropriately dis-incentivising behaviour that is required for the greater good of society, in particular investing in small – medium sized businesses. He contrasted the quantitative “risk-profiling” methods of banks and insurers with the approach taken by investors in Silicon Valley, where investments are made using knowledge and judgement about individual people and their ideas. A discussion followed on the dialogue the professions in general should be having both amongst themselves and with others on what cultural, societal, and regulatory changes may be needed. It was recognised that agreement is needed on a common purpose and shared narrative but that private interests are also required for innovation, so a balance is required. Communication is essential for everyone to understand a common purpose and be able to contribute to achieving it. This was another very challenging discussion, ending with an encouragement to keep up the conversation.
There were two other very interesting webinars in this particular series, both panel discussions, one with senior IFOA members and a second with John Kay, Sir Paul Collier, Andy Haldane (Chief Economist of the Bank of England) and Louise Pryor (current IFOA President).
The above gives a flavour of the nature of these webinars, which cover a wide range of important, intellectually challenging topics, worth engaging with.
Links to the “Finance in the Public Interest Series” webinars
Finance in the Public Interest with John Kay - http://mp.streamamg.com/tiny/br3n4
Finance in the Public Interest with Sir Paul Collier - http://mp.streamamg.com/tiny/ay60m
Finance in the Public Interest - Actuaries in the Public Interest - http://mp.streamamg.com/tiny/0pktr
Finance in the Public Interest - Panel Discussion - http://mp.streamamg.com/tiny/0n8y0
Miriam Sweeney is a member of the SAI and chair of the ERM committee.
The views of this article do not necessarily reflect the views of the Society of Actuaries in Ireland, the Enterprise Risk Management Committee, or the author’s employer.