Presidential Luncheon Speech, SOA 2017 Annual Meeting
Mike Lombardi, FSA, CERA, FCIA, MAAA
President, Society of Actuaries
Bon jour. Good afternoon. Xiàwŭ hăo.
It is an honor to serve as your president and to work with you to shape our profession’s future.
To our colleagues in Canada let me say:
C’est un plaisir et un honneur de vous servir en tant que votre président, et de travailler avec vous à former le futur de la profession.
And to our friends in China:
Wǒ hěn róngxìng zuò wèi nǐ men de huì zhǎng yǔ nǐmen xiéshǒu gòngtóng sùzào wǒmen zhí yè de wèilái.
And a warm welcome, indeed, to all of you. It is great to see everyone here in Boston.
To kick things off, I want to ask a very important question. Is there a future in the actuarial profession?
I am sure you’ve been asked that question at least once in your life by teenagers or young students seeking career advice. We should all be asking ourselves that question with a new sense of urgency. If we ignore it, we do so at our peril. Let me explain.
Anyone familiar with travel agencies, banks and manufacturing plants can see that robots, automation and software can replace people. In these industries, productivity is at record levels but we have fewer total jobs. A less dramatic but similar change is taking place in professional services. Artificial intelligence, big data and improved analytics are automating more and more complex tasks.
So much for tasks—and what about our softer skills?
As actuaries we get high marks as skilled subject matter experts, but our stakeholders do not consider us particularly business savvy or great communicators. While we know actuaries who are great business leaders, we also know actuaries who fit the negative stereotype as well.
The challenge we face in the years to come is an existential one:
Will we as a profession dwindle in numbers and importance? Or will we succeed in renewing our skill sets and our unique capabilities rapidly enough—and in harmony with emerging technology—to preserve and expand the role and value of the actuary?
Complacency is not an option.
We need to do more, much more, to tackle these threats to our relevance and value—and by “we”, I mean all of us globally.
Regardless of our home country or practice areas, we are members of the same profession and face the same challenges.
It’s up to us—both as individuals and as leaders of actuarial organizations such as the Society of Actuaries—to make sure we focus our efforts on achieving that brighter path.
What are my priorities as president in the coming year?
Relevance of the profession will remain the overarching issue and the key litmus test for action and decision making.
With this in mind, I will focus on three related sub-themes:
- Collaboration with other actuarial organizations
- International growth, and
- Expansion of actuarial opportunities.
However, in a larger sense, responding to the challenges goes well beyond me—and well beyond the SOA Board. You, too, have a key role. To move forward, we need your help. I am asking you to lend a hand so that together we can shape our common future. I will return to this point later on.
First, let’s discuss the importance of collaboration–collaboration with each other and also with other organizations.
We must work together with those who share our common interests. To quote Scott Page, this afternoon’s keynote speaker: “Progress depends as much on our collective differences as it does on our individual IQ scores.”
What is collaboration and why does it matter?
Successful collaboration includes frequent communication, relationship building, and mutual trust and respect. We need to reach out to our key stakeholders and other centers of influence, communicating our key message. And what is that message we will be communicating?
We want to increase awareness of the value of the SOA credentials and to promote actuaries as trusted advisors and leaders in the measurement and management of financial risks
To this end, the SOA, myself included, continue to work collaboratively:
- with employers—through our Employer Council,
- with universities—through our centers of actuarial excellence program,
- with regulators—through various relationships we pursue,
- with other stakeholders—via our branding efforts, and
- with leadership counterparts at other actuarial organizations.
We are building bridges and working together with other actuarial organizations to ensure the continuing relevance and success of the actuarial profession.
Building a bridge means listening with intent. Not to respond, but to really hear what the other side is saying, and to appreciate what they desire and what they know. Bridges are actively built from both sides. Ultimately, it is about building trust.
In the words of Maya Angelou, the famous American author, poet and civil rights activist, “I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
Let me give you a few examples of bridge building:
- During our term, Jerry Brown and I regularly spoke with or met with our respective counterparts at the Casualty Actuarial Society, the Canadian Institute of Actuaries and the American Academy of Actuaries. These one-on-one meetings helped to build familiarity and trust with the leaders of other actuarial organizations.
- In an effort to improve mutual understanding, the SOA invited leaders of each of these three actuarial organization to meet our Board members and to engage with them in a dialogue about their organization’s mission and vision for the profession.
We were especially pleased to see the same opportunity extended to us. That is, Jerry Brown and I—as representing the SOA president and president elect—together with our executive director Greg Heidrich, were invited to address the boards of each of the CIA and the CAS.
We spent time getting to know each other, we presented our Strategic Plan, and we discussed the mutual challenges we face as a profession. Our meetings with the CIA resulted in the signing of a Memorandum of Understanding this year—providing for future collaboration and cooperation on the education of actuarial candidates.
This new agreement builds upon and extends the CIA and the SOA relationship of many years. Beyond North America, we are fostering better relations and collaboration with the International Actuarial Association, and in particular with a few key member organizations such as the Institute and Faculty of Actuaries, with whom we now share a common interest in our new joint venture, CAA Global.
And there’s our efforts in China. China represents a growing market for both the supply and demand of actuaries. We continue to support the global actuarial community and, as we announced two years ago, we have formalized our relationship with the China Association of Actuaries.
While it may be difficult to measure exactly, all of us on the leadership team have worked hard to improve relationships with other organizations and we sincerely believe that we are moving from an era of friction and competition to one of greater understanding and broader collaboration.
So how can you as members lend a hand?
It is linked to volunteer efforts.
Before I move on to my next topic let me say a few words about volunteering. Volunteers are the lifeblood of nonprofit organizations and a way for all of us to give back to the profession.
We owe a huge debt of gratitude to our volunteers for their contributions. Eleven percent of you serve as members on our committees, on task forces, or in sections. That’s an incredible amount of talent and expertise in the service of our profession.
Volunteerism is important. So is the expertise we bring to our companies and clients. And we enhance our expertise through continuing education and by asking the right questions.
Socrates showed us that much wisdom can be acquired by asking the right questions. Another person who appreciated the pursuit of knowledge and the value of questions was Albert Einstein, who said, “Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.”
So, I encourage you to check the SOA volunteer database for opportunities to work on collaborative projects. I also encourage you as members to tell us what you think, to send us your feedback, and to share your questions.
My second theme is international development.
We need to stay ahead of the changing global economy and ensure our members have a relevant global perspective. We are a global actuarial organization with a rapidly expanding International member base in over 80 countries.
As a premier provider of education and research, we have much to offer. And we recognize that our mission is to work collaboratively with these local organizations, not to supplant them.
What is the rationale for international growth?
International growth provides more opportunities for actuaries to work with global companies both here and abroad. It promotes the value of our FSA and ASA designations and the CERA credential. And, it facilitates the mobility of actuaries by expanding their opportunities and geographic reach.
Distance can make things more difficult, but in turn it is also an opportunity for us. Let me ask you—where are the top SOA exam centers today?
It may surprise some of you that five of the top 10 SOA exam centers are now in Asia.
To remain effective, we need to tailor our services to our international members and stakeholders and to foster a sense of community with all members, regardless of specialty, practice area, section membership or country.
We strive to provide services to those members locally. We have hosted and will continue to host professional development events, from webinars to live meetings that are specific to those locations. Just recently we added new requests for research proposals in China and Asia Pacific. The local offices in both Hong Kong and Beijing help address and reinforce our connections.
China is an important market for insurance and for actuaries. The demand for actuarial education in China’s exploding economy can be seen in the numbers. Candidates in China alone are growing about nine percent each year. Compared to North America and Europe, actuaries in China are relatively young and still defining their role. Most actuaries in China work in insurance pricing and valuation. As the insurance industry matures, I expect members will take on more sophisticated roles in risk management, investments, capital management and distribution.
How active is the SOA in China? The SOA is very active in China. We train thousands of candidates, and we organize key events such as the Annual China Symposium. This symposium provided a platform for attendees to meet with Chinese industry leaders and share their experiences in the fields of actuarial science, finance and insurance. These leaders included Songchen Sheng, who is former head of statistics and survey department at the People’s Bank of China; and Jing Guo, vice head of the finance and accounting department for the China Insurance Regulatory Commission. I was honored to be in Shanghai and to share the stage with them.
Let me also tell you about Nankai University. Back in 1987, the SOA Board of Governors passed a resolution for the SOA to help establish an actuarial science program at Nankai University in Tianjin, China. That marked the beginning of growth for the SOA in China at a time when China was just beginning to emerge as a developed nation.
This visionary exchange of actuarial teachers from Canada and the United States helped to create one of China’s most esteemed university programs.
This year we celebrated the 30th anniversary of the SOA’s relationship with Nankai University.
It was gratifying to see how the seeds of collaboration that were first planted 30 years ago have blossomed to create a vibrant and growing profession. What about other parts of the world, such as Latin America?
Despite subdued growth in GDP, the demand for insurance, pensions, health care, and for actuaries in Latin America is beginning to grow. As was the case in China years ago, the actuarial profession In Latin America is not well established and the existing supply of credentialed actuaries is low.
Through our Latin America committee, we have been reaching out to local insurance associations, universities, regulators, and employers in countries such as Argentina and Brazil, to explore how we might engage in those markets.
Our Latin America committee has established a multi-year plan that aims:
- To grow awareness of the profession,
- to enhance the reputation of the profession and the actuaries in the region, and
- to help grow the skills of actuaries.
In North America, many actuaries are increasingly working for global clients or subsidiaries of global insurance companies located outside North America. What else are we doing to serve actuaries working internationally?
One way we will be addressing those needs is through the work being done to create and publish a textbook on International Financial Reporting Standards for Insurance companies—IFRS. The recently released IFRS 17 standard replaces a current “hodge-podge” of different and inconsistent insurance financial reporting standards outside the U.S. with a single set of principles. While IFRS 17 is an insurance accounting standard, actuaries have a deep understanding of insurance products and risks.
We are uniquely qualified to play a key role in assisting management and other users of financial statements in assessing risks, measuring liabilities, and the reporting of results. The SOA textbook, which will be similar in size and scope to the current U.S. GAAP textbook, will help actuaries around the world to interpret and apply those emerging standards and the financial statements to be produced. It is another example of our organization helping the profession grow and adjust to the world around us.
My third and final theme is the expansion of actuarial opportunities.
This is a major concern and, to be frank, we need to significantly step up our efforts to deal with our rapidly changing environment. The challenge for any profession is to remain relevant to its key stakeholders.
That applies to the actuarial profession as well. We address the question of relevance both individually and collectively. Individually, we do so by committing to lifelong learning and continuing education—which replenishes our skills and ensures we can meet the needs of our future employers and clients.
We also remain relevant:
- by developing skills outside our areas of expertise,
- by working on our weaknesses as well as our strengths, and
- by improving our "soft skills".
We also enhance our relevance collectively, as an organization, in many ways. Whether it be...
- by reaching out to employers in industries other than insurance, or
- by chatting with students to consider career options, or
- by supporting educational institutions and universities, or
- by seeking joint sponsorship of conferences and events with wider focus.
All of these activities serve to enhance the actuarial brand and to broaden our relevance.
Actuaries are and should be the leading professionals in the management and measurement of financial risk. When employers think of actuaries, I want them to think of us as more than technicians. I want them to think of us as leaders, problem-solvers, and as an essential part of the team, contributing meaningfully and directly to company success.
Those we serve are undergoing tremendous change. Our future depends on adapting to that change and serving our customers well. In our strategic plan, we have identified a number of key strategic initiatives, such as enhanced environmental scanning, strategic research, and education in predictive analytics for both new and existing members.
The ultimate goal of our strategy is simple and resolute:
- We want to be relevant to employer and client needs.
- We want to serve a large and growing profession and in turn provide meaningful work for current and future members.
- We want to be recognized and seen as credible with our stakeholders—employers, clients, policy makers and the public— by clearly defining what we do, what value we can add, and how we differ from other professionals
- We want to expand the frontiers of the actuarial profession though ongoing strategic research—by which I mean research which will allow us to find new tools and applications for actuarial science.
In other words, we need to make sure we remain highly sought professionals and that stakeholders continue to seek out our members for their unique skills and high ethical standards.
Let me conclude with a question and a challenge to you:
“What can you or any one person do to help shape the future? Can you make a difference?”
Think back to the historical figures whose lives and examples show us that, yes, one person can make a difference, a big difference, to the world.
The great civil rights activist, Martin Luther King Junior, foresaw a brighter future. He knew that to get there would require not just conviction but also a willingness to pitch in and help: “If you can't fly then run, if you can't run then walk, if you can't walk then crawl, but whatever you do you have to keep moving forward.”
I mentioned before how our volunteer driven organization is collectively stronger when we collaborate. The best way for you to help shape our future and make a difference is through your commitment.
You can help by increasing your skills and your level of engagement with the SOA.
How?
- Continue your professional development,
- Tap into our available research,
- Connect with your peers, and
- Join sections, which provide many abundant opportunities for technical and personal growth.
If you’re already part of a section, why not consider joining one or two more?
- Help candidates and new actuaries make connections at work,
- Mentor others, give career advice and help steer people in the right direction,
- Provide internships at your company for promising candidates
- Share your expertise by offering to speak at local actuarial clubs or at actuarial or industry meetings, and
- Use the SOA volunteer database to identify volunteer opportunities that fit your schedule, expertise and time commitments.
Increasing your level of engagement advances your skills, gains new experiences and improves your leadership qualities. Increasing your own strength also makes us collectively stronger.
- Let’s work together to keep the actuarial profession vibrant.
- Let’s focus on attracting the best and brightest to our profession.
- Let’s collaborate with other organizations to advance our profession.
- Let’s expand actuarial opportunities in emerging fields.
- Let’s sharpen our actuarial skills and at the same time enhance our business acumen and communications skills.
- Let’s prove the relevance of our credentials.
Together we will make a difference. I ask you to join us and lend a hand to shape our future. Thank you.