Mike McLaughlin
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Mike McLaughlin
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As President-Elect and President ...
... my objective
is to increase actuarial employment opportunities, while maintaining and
enhancing the value of our credentials. For this to happen, we will have
to think outside the box of traditional actuarial work. This is not to compromise our
skills and traditions! To the contrary, I believe that actuarial skills and
methods have been underutilized for years. With our training in mathematics,
financial economics, model construction, and risk management, it just can’t be
true that our only employment is in insurance and benefits. In other countries
actuaries are working for banks and asset managers. Our training applies for
example to pricing, or capital and risk management in manufacturing,
transportation, or energy companies. We will accomplish this by market development, attracting new entrants to the profession, continuing education of current members, and communicating with non-traditional employers, all the while maintaining our high educational and professional standards. I
will bring my own ideas, but at the same time, I am committed to working with
the Board under the SOA’s strategic plan. The strategic plan, whether current
or future, helps our organization to be more effective in the long term, instead
of tackling a series of short term plans.
We’ll never abandon our traditions. But we can provide valuable
professional services in more industries. One good example is enterprise risk
management. We’ll grow in influence. We’ll also have to grow our profession
in size. But that will reflect a greater number of job opportunities. This is an exciting time for the SOA!
Here is the complete text of my SOA Presidential Address, October 27, 2009: Good afternoon! Thank you very much for that warm welcome. I’d like to begin by thanking Cecil for his leadership
over the past year. He will be moving on to become president-elect of the
International Actuarial Association. Cecil, now actuaries worldwide will benefit from your wise
guidance. We wish you the best. Let’s give Cecil a round of applause. -
- - I would also like to welcome Don Segal as president-elect of
the SOA. Don has served on our Board for several years, and I look forward to
working with him in the year to come. Let’s give Don a round of applause. - - - For those of you who don’t know me, I’ll tell you a
little bit about myself. I was born in Jamaica, went to university in Canada, lived
in the Bahamas, and moved to Dallas. But I currently live in Chicago where I am
a principal with Deloitte Consulting. I
consider Chicago to be a fantastic city, in spite of the dramatic difference in
climates from the Caribbean! I learned about the profession while I was a bright, young
computer programmer at British-American Insurance Company in Kingston, Jamaica.
There was a project in which the actuaries needed premiums and reserves for a
new ‘rate book’, as we called it back then. I was the only person at the
company who knew Fortran programming, so I got the assignment. They sent me commutation tables and formulas, and while
coding, I discovered and fixed an error in the formulas that they provided. That
impressed my bosses, who suggested I should take the actuarial exams if I liked
that kind of work. And that is the short version of how I joined the profession.
My lovely wife, Mary, encouraged me through the long series
of exams. She is here today, along with Rachel, one of my two wonderful
daughters. There is also a strong contingent of actuaries from the
Caribbean Actuarial Association attending this meeting. The CAA has been a great
source of support and friendship for me over the years, and I am very pleased to
see them here in Boston! Over my career, I’ve benefited greatly from our
profession, which brings me to why I’m here today. -
- - I’m here to talk about opportunity. I see opportunity
everywhere! Opportunity for the profession as a whole, and for each of us as
individuals. You’ve all seen the changes taking place in the
traditional markets we serve. In the pension area, we are all aware of the shift from
defined benefit to defined contribution plans. This has spurred us to take a new
look at funding retirement in the future. In the life insurance industry,
capital is scarce, competition is intense, and actuaries need to be ever more
creative. Health care in the United States is still under debate. The focus on
health reform is a great opportunity for actuaries to contribute to the
discussion. In addition, the financial turmoil of the last year or so
has driven governments, private-sector businesses and institutions to take a
deeper look at their financial risks. These are challenges, yes. But these are the very challenges
that we, as actuaries, are equipped to manage. These challenges present a great opportunity for our
profession. In fact, the opportunity is so great, actuaries may be in danger of
being overwhelmed by it. Many other professionals are getting involved in finding
risk management solutions—and they’re doing a good job! We face
competition! We are a relatively small profession, with approximately
48,000 actuaries worldwide, of which there are 21,000 SOA and approximately
5,000 CAS members. To put our size in perspective, the AICPA, a professional
organization of accountants in the U.S., has 340,000 members. There are also
more than 96,000 CFAs, which is an increase of 47% in the past five years.
Obviously, these aren’t apples-to-apples comparisons, but you get the idea. As a profession, we need to grow to meet the opportunity. At
the same time, there must be no compromise of our rigorous standards. You may ask, “If more actuaries are part of the pie,
doesn’t that leave a smaller piece for me?” And others may say, “Things
are good. I have a good job. I’m well-compensated. Why should we change
anything?” I like to think of the adage, “Growth is the only evidence
of life.” I don’t believe our opportunities are fixed in size, or static in
nature. And change is all around us. Our profession can
and should grow. The
business world needs our training in mathematics, financial economics, model
construction and risk management. - - - I firmly believe our actuarial skills and knowledge are
underutilized. There are also lessons to be learned from other countries. In Australia and South Africa, for example, actuaries are
working for banks and asset managers, with financial product pricing and
management. We should also look at how we can apply actuarial skills to
solve problems in other areas such as manufacturing, technology and
transportation. For example, you know how complex airfares can be—that could
be a great area to apply actuarial pricing skills. Technology products, too,
require sophisticated pricing and management techniques. If we can demonstrate the value of our skills, employers
will require a greater supply of actuaries to fill those roles. For another example, consider enterprise risk management.
With ERM, our profession has the opportunity—perhaps the duty—to apply our
skills much more broadly than ever before. ERM is a logical extension of
traditional actuarial methods and training. We will manage a wider range of
risks, and consider their interactions across an organization in many scenarios.
I believe it is the future of our profession. It is important for us now to
think of ourselves as actuaries and
risk managers. How are we as actuaries equipped to be leaders in ERM? With
our CERA credential. The CERA embodies the set of skills employers and clients
need to execute enterprise risk management. And this is true for life, health, pension, and
property/casualty actuaries. It’s true in the U.S., in Canada, and around the
world. The SOA led the way with the CERA credential and now
actuaries worldwide are recognizing its value.
This is a huge endorsement of the SOA’s leadership and ERM for
actuaries. One of the biggest challenges has been figuring out how to
maintain consistency across borders, while upholding the high quality,
consistency and rigor of the credential. A credential that varies by country in
these important characteristics is not a global credential. We will have
a rigorous quality assurance process. There will be no negative impact; in fact,
the global CERA will boost the image of actuaries as risk managers. Most of the
details have been addressed, and we’re close to signing an agreement. Our profession is truly blazing a trail … I haven’t yet
seen another credential offered by multiple organizations working
collaboratively. - - - As I talk to members, one question I hear consistently is,
“Why do we need so many actuarial organizations?” In reality, each
organization serves a different but important purpose. People have mentioned the
idea of forming one large actuarial organization. This isn’t practical. And,
in my opinion, isn’t necessary. But rather than maintain the status quo, we could reshape
how we manage the profession. I would like to discuss that for a moment. Let me give some
examples. The SOA and CAS already administer certain exams jointly.
We have a profession-wide Image Advisory Group, and we work together on the
Marketing and Market Development Plan. We also collaborate with the Casualty
Actuarial Society and the Canadian Institute of Actuaries on the Climate Change
Committee. But we can do more ... We must clearly identify the mission of the profession as a
whole, and the appropriate role for each organization. Recently we have
formed the Actuarial Collaboration Task Force, ACTF, composed of the current
presidents of the five U.S.-based organizations. We have defined roles for each
body more clearly and will also recommend various organizational changes to
reduce overlap and make better use of volunteer resources. We have made great strides, and I know we will be working
even better together in the future. Obviously, we can’t discuss the future of the profession
without talking about the Future Education Methods concept. Let me say right now, I do not support FEM in its
present form. On the other hand, some new and different ideas have surfaced that
deserve consideration. The Board had a lively discussion of this, at the meeting
that concluded on Sunday. After
considering your comments, the Board has acknowledged your concerns, and has
decided not to proceed with FEM in its present form. The Transfer Knowledge
Strategic Team will communicate education strategy to the Joint Steering
Committee, which has been asked to identify possible alternatives to meet our
educational goals, without university course exemptions, as currently proposed.
We’re asking them to report back to the Board in February 2010. I will also
appoint a task force to communicate with our members and employers specifically
on this issue. We have heard your voices. Although it has been controversial, one benefit of the FEM
discussion is that it has emphasized the importance of good member
communication. The Board and SOA staff are looking at several ways of
obtaining feedback. One of the first was the ‘Conversation with the 2010
President’ that took place earlier this morning. It was great to have many of
you attend this discussion. Cecil Bykerk, Don Segal and I will also be available
in the Marriott’s 3rd floor Atrium at 4:00 today for informal
discussions with you at our ‘Meet the Presidents’ event. Some other ideas … Our friends at the CAS use a member advisory panel, and I
think that’s a great idea worth exploring. We are also considering more
frequent communications from SOA leadership, and using a blog, or Twitter. I
want you to know that you are free to contact your Board, section leaders and me
with any ideas, comments and suggestions you may have. In conclusion, I look forward to an exciting year of
improved collaboration, growth—including broader influence in ERM—and
opportunity for the actuarial profession. Remember that we are actuaries and risk managers. We must look outward together, in order to expand our horizons. I’d like to conclude with a
quote from General Douglas MacArthur, who once said, “There is no security on
this earth. Only opportunity.”
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