Challenges to the Actuarial Profession in 2014

87551538It has been quite a year for our profession. This year is even more promising as we turn 100 years old. CAS President, Wayne Fisher, mentioned in the January Actuarial Review that we are in an environment of change, so, there must be a vast amount of interesting things going on right now that maybe only you know about.

As you may know, I am a member of the CAS Risk Management Committee, and while this team works on known risks, we also have to know what is possibly coming in the future. Last time we surveyed on the blog, four items surfaced that were identified as emerging issues.

Emerging Risk #1: Changing demographics and workforce – The U.S. population is aging as baby boomers are living longer, and succeeding generations have experienced lower birth rates. As the population ages, and people are forced to work longer due to their financial situation, the workforce will contain proportionately more workers 65 and older.

Interplay of various risks could result in a world where a large youth population contends with chronic, high levels of unemployment, while concurrently, the largest population of retirees in history becomes dependent upon already heavily indebted governments. Both young and old could face an income gap, as well as a skills gap so wide as to threaten social and political stability.

Emerging Risk #2: Influences of technology

  • Increasing dependence on technology
  • Internet/social media
  • Growing cyber threats

Cyber security ‐ there is almost certainly going to be some nasty cyber‐attack at some point from criminals or hackers. While this could be a major financial event, it may highlight exposure that all people who handle large quantities of data face.

Emerging Risk #3: Limited government solutions
Government is limited in its ability to insure broad societal catastrophic risks (such as flood insurance, terrorism coverage). As new risks are identified, it is more likely that a private sector solution will need to be developed.

Emerging Risk #4: Alternative sources of capital challenging reinsurance markets

  • Insurance Linked Securities supported by private equity, pension funds, etc.
  • Start-up reinsurance programs supported by hedge funds, high net worth individuals, and wealth management groups

We would like to hear from you and what you see as future issues that may affect the CAS and our profession in general. What is happening now in your geographical or specialty areas?

We look forward to your input. Please “Leave a Reply” below. If you would rather provide input to the Risk Management Committee directly, please send an email to the committee’s staff liaison, Todd Rogers, at trogers@casact.org.

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About Terry J. Alfuth

Terry J. Alfuth, FCAS, is a member of the CAS Risk Management Committee. He owns his own consulting firm, Actuarial Property & Casualty Consulting LLC located in Palm Beach, FL.

1 Response to Challenges to the Actuarial Profession in 2014

  1. avatar John Krigger says:

    Emerging Risk #4 Society spends lots of money to mitigate small risks while neglecting large risks.
    This problem is currently hampering efforts to conserve energy in buildings. See my blog post at the following URL:
    http://blog.srmi.biz/suggestions-simpler-combustion-testing/
    Also follow the links to other blog posts contained in that post.
    I’d like to meet an actuary, who is interested in working with the energy conservation industry to measure risks involved in conserving energy in buildings. We need to evaluate risks in order to make retrofitting buildings healthy and safe without spending money on risk reduction that is unnecessary, ineffective, or uneconomical.

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