President's address: Setting standards
Nick Dumbreck welcomes active debate as an essential part of a vibrant profession in 2008
By the time you read this, two major
consultation exercises will have been
completed. One relates to the framework
for behavioural standards for actuaries,
and the other to the corresponding framework for
technical standards. Having robust but workable
standards is hugely important for the reputation
and effectiveness of the Profession but getting
these frameworks right was never going to be easy.
The consultation exercise has brought
widespread support for the overall structure of the
Actuaries’ Code, comprising a series of principles
each with a supporting AP Standard. However,
there have also been calls for significant changes
to be made to parts of the proposed content,
including revisiting the list of principles. As is
typical in such situations, some of the comments
are diametrically opposed, with requests for
public interest aspects of the draft Code to be
strengthened being matched by arguments that
the current wording is too onerous. However,
there are some recurring themes that will need to
be addressed in the next version of the documents.
One of the most forceful representations is
from the Professional Oversight Board, which
has submitted a comprehensive and constructive
critique of the draft Code and standards, drawing
on the experience of other professions. Among
other things, this emphasises the importance
of independence of mind and courage, and
the need for mechanisms (such as whistleblowing
obligations) to reduce the vulnerability
of actuaries to bullying. Despite the trend for
statutory actuarial roles to become advisory rather
than decision-taking in nature, having a strong
backbone remains an essential attribute for the
effective performance of these roles. However,
the Profession’s view is that a ‘one-size-fits-all’
approach is not appropriate, and that specific,
more demanding standards are required for
reserved roles, with a less onerous regime applying
to other work where exclusivity and statutory
protections do not apply. An interesting debate
with the Board is in prospect.
Discussion of the consultation paper Towards a
Conceptual Framework, issued by the Board for
Actuarial Standards (BAS) in November 2007, is
less well advanced at the time of writing but it
appears destined for an easier ride than the draft
Actuaries’ Code. Proposals in the preliminary
consultation paper issued last April for an
overarching framework of Standard Actuarial
Principles and Techniques have been dropped
in favour of a less ambitious approach, which
recognises that different methodologies are
needed to comply with differing regulatory
requirements and accounting standards. A draft
of the conceptual framework itself is promised
in spring 2008 but this will now be a framework
for technical standards, rather than a framework
for actuarial work or work product. This is a
welcome change of emphasis.
A few aspects of the latest consultation
paper seem likely to prove controversial.
The proposal that actuaries should be
required to report the undiscounted
value of projected cash flows as well as
the discounted value surely requires
further thought, as does the proposed
requirement to assess the probability that
any value of liabilities will be sufficient
to discharge those liabilities. Much of
it is common sense, however, and it is now
in everyone’s interests that the conceptual
framework be fi nalised quickly, so that
preparation and updating of technical guidance
can become the main priority for the BAS.
Member interest groups
It is now only a month until the Profession’s
new structure takes effect. The changes are
aimed at making the Profession more responsive
to the needs of members, and they will work
best if members are prepared to get involved
and to let us know what they want from their
professional body.
One way members can do this is through
member interest groups. To remind you, these are
intended to be relatively informal groupings of
members with a common interest, for example,
the role of actuaries in understanding and
responding to climate change, or equity release
products. Our first experiment in this area, the
Risk Management Special Interest Group (RMSIG),
has been highly successful, attracting over 500
members and large audiences for its networking
evenings. Risk management is being upgraded
under the new structure because of its strategic
importance and emergence as an examination
subject, and will be supported by a practice
executive committee. However, we hope that
many new member interest groups will be formed,
and that they will help take the Profession in new
directions and expand our infl uence.
Some groups will be sponsored by practice
areas but others will be created through the
initiative of one or more individual members.
For more details on how to set up a group,
please contact Peter Dingwall at peter.dingwall@
actuaries.org.uk or +44 (0)20 7632 2136.
Open forums
A key element of the Profession’s strategy is the
provision of better knowledge-sharing services.
One of the initiatives in this area is the
development of open forums. An open forum
discussion may take several forms — face-toface,
web-based or by phone — and will cover
a relevant topical issue. It will be aimed at
members but, where appropriate, people outside
the Profession may be invited to participate. It
may be led or chaired, but people should feel
comfortable to participate and it will not be
a lecture. The objective should be that there
is genuine sharing of knowledge and taking
forward of the debate in a particular area so that
the end product is of suffi cient quality to qualify
as CPD under the Profession’s scheme, verifi able
where practical.
Internet-based open forums will run on
wikis and a technical platform for these is being
developed by the Profession’s staff. Face-to-face
meetings may take several forms — networking
evenings of the type run by the RMSIG and
some practice boards would fi t the description of
an open forum, as would the breakfast meetings
held in
Changing Future.
Within the new structure, open forums will
be arranged under the auspices of the Member
Support Executive Committee. An open forum
task force, chaired by Stewart Ritchie, is currently
developing rules for, and practical guidance on
running, open forums. It is expected that a trial
open forum breakfast meeting will be run in
activities, and help usher in a new, less formal style
of discussion for actuaries.
Nick Dumbreck is president of the Institute of Actuaries
Nick Dumbreck
