Archive for January 2009

Elevator Speech – Actuaries & ERM

January 31, 2009

Here are 25 items that were submitted via email to include in an elevator speech about why actuaries make good risk managers.

1. “Actuaries are bright enough to understand the models, curious enough to do so, and skeptical enough to understand their limitations.”
2. quantitative background/training/experience, understand the mathematics/techniques/metrics used in risk management
3. Training and experience in building and using financial and insurance models
4. understand the key assumptions, benefits and limitations of financial models, know the difference between the map and the territory.
5. trained to adopt a long term perspective both in terms of drawing from past experience as well as building long term financial projections
6. actuarial methods are outdated and inconsistent with financial economics
7. Can provide a tactical view of enterprise risk management
8. can also implement the qualitative sides of risk management: reporting, governance issues, business continuity, emerging issues techniques, regulatory issues,
9. Can provide a strategic view of enterprise risk management
10. can assist in taking risk management to the Board Room.
11. organized as an international profession with continuous training, standards of practice, integrity
12. recognized for their inquisite mind capable of seeing through the organization
13. capable of anticipating trends and risks – known unknonwns and the unknown unknowns risks/trends
14. capable of convincing/positioning/educating the organization accordingly and in line with its risk appetite
15. deep understanding of the financial products and financial organizations
16. familiar with risk Pricing, Markets and marketing and Operational risks, their inter-relationships, their measurement/management paradigms and their links to the financial statements
17. good communication skills
18. trained in understanding the relationships between different financial data series (losses from different years, for example, which require on-leveling/trending)
19. trained in making reasonable, justifiable, practical, and useful decisions based on data known to be less-than-fully credible
20. balance of technical numerical expertise with “real-life” business experience and judgment
21. have a thorough understanding of the long-term cashflow projections through their involvement in pricing and reserving. They understand these cashflows are based on many assumptions, which they developed in the first place by using their specialized education and experience, and how each assumption can impact the cashflows. Therefore, they have a deep insight into the variability of these cashflows as well.
22. Trained to simultaneously focus on more than one contingency while also looking at the longer term horizon.
23. PRUDENT risk experts
24. analyze risk using objective cash flows and objective estimates of risk – not beholden to “relative valuation”, which can break down in crises.
25. Able to reflect the contingency that the firm may be forced to hold the risk on the balance sheet and may not be able to “simply exit the position” when analyzing downside risk

Therefore actuaries are excellent candidates to fill any aspect of Risk Management positions: measurement, management, reporting and/or mitigation activities!

Riskviews Statistics – Year End 2008

January 15, 2009

The Riskviews webblog had 3369 hits in the fourth quarter.  There are now 315 items on the Blog spread over 45 pages.

The two most active pages in December were the Webinar pages and the Emerging Risks Project page.

Happy New Year,

Dave Ingram

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