Whether we like it or not, the environment for the Casualty Actuarial Society and its members is changing. One might paint different pictures of these environmental changes. One picture might be a major paradigm shift for the CAS that drives innovation and excellence. Another picture might be an evolution of our actuarial profession and the role of the CAS among other organizations in the profession, perhaps including some vision of consolidation, or another picture might be an end to our tidy view of the world, perhaps a more chaotic conglomeration of our profession with data scientists, financial engineers and behavioral architects.
As a CAS member and as an actuary, I have always put a very high value on the ability to share knowledge and expertise among colleagues who do the type of work and face the same problems that I do. Some of that sharing is among actuaries who work for competitors. Nonetheless, we all can and do gain from the community of knowledge sharing and collaborative spirit. Many other professional disciplines also experience the value of collaboration, in particular among scientists and academic scholars. They also operate in environments that can be quite competitive.
Big data, data science and data analytics are changing the way we work and think. They have already had an impact in many aspects of our personal and professional lives. It is not simply a matter of what we have to offer or how we get recognized in this crowded, confusing and competitive field. Rather the questions are how do we accelerate our knowledge, practical experience and insights, and how do we make a difference where data-driven decisions are most needed.
One of the most important talents that I have gained from my CAS education and being a part of the CAS culture has been studying other disciplines and learning how to integrate various concepts from mathematics, statistics, economics, law, business, behavioral science, finance, accounting, technology, medicine, engineering, environmental science and public policy. I could not have learned so much of value to my work and my career, if it were not for the multidisciplinary approach to professional education that is core to the CAS. It is this core that teaches how to separate the “signal” from the “noise.”
In his book The Signal and The Noise, Nate Silver refers to the Russian novelist Leo Tolstoy’s essay “The Hedgehog and the Fox,” the title of which was borrowed from Greek poet Archilochus. The hedgehog is described by Silver as one who trusts “in governing principles about the world that behave as though they were physical laws.” Silver calls the fox a scrappy creature “who believes in a plethora of little ideas and in taking a multitude of approaches towards a problem.” Silver further portrays foxes as multidisciplinary, adaptable, self-critical, complexity-tolerant, cautious and empirical. According to Silver, it turns out that foxes have some key tendencies, such as finding new approaches, pursuing multiple approaches, acknowledging prediction errors, making predictions in probabilistic terms and relying more on observations. Silver has discovered that foxes are pretty good at forecasting.
So do you want to be a fox?
There is no doubt in my mind that the CAS has taught me how to be a fox. Many of the problems actuaries work on require decisions where the outcomes are not inherently predictable. Hence, the field of data analytics and its application to data-driven decision making is a natural fit for a CAS-trained actuary.
Today, however, we are vastly outnumbered by growing herds of wannabe foxes. Predictive analytics, data analytics and data science are the territory that attract this new breed of fox. Big data is their source of energy.
So our challenge is to expeditiously collaborate with this new breed of fox. It is a time to build upon our current alliances, form new ones and expand our sphere of influence. We should be inviting and recruiting these new foxes into our “den.”
Our CAS actuarial community has long advocated collaboration, but we have become distracted from these values by the potential for competition among actuarial organizations. This distraction should not direct our attention away from the new breed of fox surrounding us. We need to have a clear vision of how to be a world-class collaborator, especially beyond our traditional actuarial boundaries.
Let’s not dial down our collaborative efforts or narrow our views of collaboration because of changes in competitive attitudes — to do so is the antithesis of being a fox.
We have a century of learning from many disciplines as our foundation. This foundation has helped us solve problems and make well-informed, data-driven decisions, sometimes beyond traditional actuarial problems. Our future contributions to society are tied to our collective and individual skills as world-class collaborators. Those who share our view of collaboration should earn our respect, and they should be respected as kindred collaborators by our leaders, even if we do compete in some areas.
Competition is the noise. Collaboration is the signal. Be a fox.
Please share your reactions and ideas by commenting below.
This blog post is from the President’s Message, printed in the July/August Issue of the Actuarial Review.