Professionalism Webinar Looks at Ethical Decision-making

The Academy hosted its first professionalism webinar of 2019, “Promoting Ethical Decision-making: Rules, the Human Brain, and Cognitive Biases,” on April 18. Presenters Anita Cava, professor of business law and ethics at the University of Miami School of Business; Ken Kent, member of the Academy’s Council on Professionalism; and Lisa Slotznick, Academy Board member and vice president, casualty, covered a range of issues and took questions from  attendees.

Academy General Counsel and Director of Professionalism Brian Jackson moderated. The webinar, which drew more than 2,000 attendees, explored the intersection of actuarial professionalism and ethics, with a look at how cognitive biases can affect actuaries’ work. Cava began with a discussion of what it takes to be a professional actuary. One must not only know the Code of Professional Conduct but be able to engage in the critical thinking necessary to apply it correctly and make a decision that will withstand public scrutiny, she said.

Critical thinking requires considering the immediate and long-term consequences of a decision, but people are subject to unconscious cognitive biases that affect their decisions. “These biases are unconscious, DNA-level, and shared by all of us,” Cava said. And because of these biases, she continued, “we will make decisions that further our own self-interest.”

The key, she said, is to consciously address unconscious cognitive bias. One way to do this is by using a four-step test. The first step is to recognize that every decision, no matter how small, has an ethical dimension. “The first less-than-honest act is often the most important one to prevent,” she said. Awareness and paying attention are critical, she stressed.

The second and third steps are the ability to choose a course of action and to have the desire to act. Small steps such as recognizing and deciding to make the right choice result in better conscious decision-making, she said.

Finally, the most important step is the courage to act. “It’s often said a single individual who believes strongly can affect the environment in which they are working and can make a difference,” Cava said. “We must normalize the idea that we must all take risks—sometimes even career-ending ones—to secure and protect core values.”

“Each of us has a responsibility to address these steps in order to maintain the quality of our profession and our right to remain self-regulated,” Kent added.

Slotznick reminded the audience that actuaries do not need to face such dilemmas alone. “The Actuarial Board for Counseling and Discipline has a request for guidance procedure, where we can have a discussion with another actuary about what to do next,” she said.

The speakers then engaged in a lively discussion fueled by audience questions. In response to a question about addressing a principal’s bias, Slotznick suggested showing the principal what their bias is and the implications of that bias for their business.

In response to a question on how to handle an unethical directive from a supervisor, Kent said the first thing to do was to determine if the request would violate Precept 1 of the Code of Conduct. “If I can’t get past Precept 1, I can’t do it,” he said.

“There are times when one has to simply walk away from an engagement. And one must think, ‘What are the consequences of not walking away?’ Perhaps those consequences are far worse than seems apparent,” Cava added.

In closing, Cava noted that a great deal of research shows that an employee’s behavior is far more influenced by his or her direct supervisor than a C-level director. “It’s not just the tone at the top, but also the tone right above your head, that influences decisions,” she said.

“How are we going to be remembered as professionals, as mentors, as advisers? How can we be allowed to make mistakes, recognize our own mistakes, point out the errors of others, and view them in a way that leads to positive change? Recognizing and learning from those mistakes is the way to making better, more defensible, and in the end more ethical decisions,” she concluded.

Slides and audio are available free for Academy members.