By Shawna Ackerman
“Our lives are not defined by any one action. Our lives are the sum of our choices.”—Mission: Impossible–The Final Reckoning
By the date this column is published, the release of Mission: Impossible–The Final Reckoning will be just weeks away. If you regularly go to the movies you will have already seen the trailer, perhaps many times. The opening lines to the trailer, noted above, remind me of the ABCD process. You do not end up in front of the ABCD because of a single action or mistake. It is almost always a series or sum of choices, events, and missteps.
The Request for Guidance (RFG) process is intended to help actuaries avoid professionalism missteps and stay on the right path. Numerous additional resources are available to guide them in determining an appropriate path forward. The following are three common areas where actuaries face professionalism challenges, along with key questions, recommended actions, and resources to help prevent missteps, keeping the individual actuary on the right path and mitigating any potential negative impact on the reputation of the broader actuarial profession.
Qualification Standards
Precept 2 of the Code of Professional Conduct (Code) states “An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience, and only when the Actuary satisfies applicable qualification standards.”
According to the ABCD Annual Reports from 2021 to 2023, Precept 2 is the second most common topic for an RFG. This may be partly due to the revisions initiated in 2021, which took effect on Jan. 1, 2022, for statements of actuarial opinion beginning Jan. 1, 2023. Nevertheless, prior to 2021, Precept 2 was typically among the top three topics for RFGs.
The Academy website offers a comprehensive listing of frequently asked questions about the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States (USQS). This is an excellent resource if you have specific questions on the USQS.[1]
A more general question to ensure you’re on the right path is simply “Am I qualified?” This can be broken down into a series of questions, such as:
- Do I have the requisite experience?
- Do I have adequate subject area knowledge?
- Is my continuing education up to date?
The suggested actions and choices are straightforward: Keep current with, and document, relevant continuing education throughout the year. Obtaining the minimum required six hours of organized activity credits can be challenging for those on limited budgets. Webinars and committee work are cost-effective activities, while reading and reviewing current Actuarial Standards of Practice (ASOPs) and commenting on proposed ASOPs can satisfy the professionalism credits. Starting any new assignment with a review of the Code, USQS, and applicable ASOPs is a near-guaranteed way to accumulate adequate hours on professionalism topics. It also provides the solution to the easily avoided misstep of using an out-of-date ASOP for an assignment that has become “routine” and thereby avoiding a possible material violation of Precept 3.
Pressure from Principals
In 2015, the Academy survey results indicated that responding to pressure from principals was overwhelmingly the highest perceived concern for actuaries.[2] Since that time, RFGs involving pressure from principals have continued to come to the ABCD. Pressure can take on many forms, such as pressure to complete an assignment without adequate time, pressure to change the actuarial report or result, pressure to sign a report, or pressure to opine in an area outside of the actuary’s area of expertise.
When faced with pressure to change results, revisiting the assumptions that led to the result is a good place to start. Ideally done with the principal by your side, focusing on the decisions along the process rather than the result gives them the opportunity to challenge, and you the opportunity to reconsider reasonable alternative assumptions. Recall ASOP 1, Introductory Actuarial Standard of Practice, Section 3.4.1 states, “… there will often be a range of reasonable assumptions, and two actuaries could follow a particular ASOP, both using reasonable methods and assumptions, and reach different but reasonable results.”
Responding to time pressure can be tricky. Can you reprioritize other projects? Negotiate for more time? Get more resources? Or scale the project to the available time? Ultimately, if you do not believe you can perform the work with skill and care within the time allowed, saying “no” is the safest answer professionally. No single assignment is worth gambling a hard-earned credential and reputation.
Explaining the importance of professionalism to the principal before starting the work can mitigate future pressure. The Academy’s Committee on Professional Responsibility published a discussion paper on this topic in 2021.[3]
Mistakes Were Made
It happens.
Adequate time to complete the assignment, technical reviews, data reconciliations, and peer reviews are some of the elements and actions that can prevent errors from making their way into an actuarial analysis or report. But what if “it” happens? What then?
Apologize and fix it. Assess the materiality. If it is small, ask the principal how they would like it treated and document the resolution. If it is big, develop a correction plan that meets all legal requirements, execute on the plan, and document the resolution. In both cases, propose corrective actions to address the root cause of the error. This might include additional training, changes in policies, or enhanced oversight mechanisms which mitigate the possibility of future errors and demonstrate a commitment to professionalism.
If it is a large error, will the above actions prevent a complaint of an alleged material violation of the Code? Not necessarily. Nevertheless, you definitely do not want to cover up the mistake. It is important to remember that part of Precept 13 contemplates resolving an apparent violation. If the mistake has been fixed and preventative actions implemented, there is a better chance that the error will not result in a complaint or recommendation for disciplinary action. However, the decisions and recommended actions by the ABCD will be based on the specific facts and circumstances. Nor is the “reckoning” of the ABCD final. The ABCD recommends discipline. It is up to each of the actuarial membership organizations to determine if discipline is to be applied and to implement any disciplinary actions they deem appropriate for their respective members.
Our mission, which we choose to accept, is professionalism. No need to jump off cliffs, hang from airplanes, or fight off sentient rogue AI (yet). Instead, make the choices to follow the Code, stay current with actuarial standards of practice, keep current with and document your qualifications, and make use of the resources available to help guide you from the Academy and other organizations, like RFGs to the ABCD. This column will not self-destruct in five seconds.
Shawna Ackerman, MAAA, FCAS, is a property casualty actuary specializing in catastrophe risk. She is vice chairperson of the Actuarial Board for Counseling and Discipline.
References
- American Academy of Actuaries, Frequently Asked Questions on the U.S. Qualification Standards.
- American Academy of Actuaries, Key Ethical Concerns Facing theActuarial Profession, April 2015.
- American Academy of Actuaries, Explaining Professionalism to Principals, October 2021.