Innovation involves taking a risk.
I think if you want to be an innovative actuary then you need to get more used to taking (sensible!) risks and stepping out of your comfort zone. The innovative actuaries I know seem to be comfortable with risk. They don’t take reckless risks, but they also know that if they are to break new innovative ground, they need to embrace uncertainty to some extent.
I really like this quote from philosopher, Simone Weil, on the value of risk:
“Risk is an essential need of the soul. The absence of risk produces a kind of boredom which paralyses in a different way from fear, but almost as much.”
I also believe mindset is critical. There are many ways in which mindset plays a role, but one key characteristic of innovative people is that they have a mindset of continuous iteration and reflection.
Many innovations result from iteration over time as opposed to a huge sudden leap. And to iterate effectively, you need to have a bias towards action and finding out, as quickly as possible, what works and what doesn’t. Being action-oriented and constantly running experiments with humility (e.g. don’t keep pressing ahead with something that clearly isn’t working) and reflection on the data points is key.
It all comes down to adding value. If we, as actuaries, can show that what we do adds real tangible value to the organization then impact should naturally follow.
Actuaries need to invest significant time to gain knowledge and pass exams to show they have expertise. If the professional bodies can stay ahead of the curve and ensure the actuarial examination systems are forward-looking and fit for purpose, then this is likely to also help immensely. Of course, the actuarial exam system is only one part of this. In this fast-changing world, learning should be perpetual so that we are constantly adding to our skill set and knowledge as things evolve. Mindset again comes to mind. If actuaries have a mindset of inquisitive learning, then they are likely to remain in high demand and produce real tangible impact.
Finally, I believe perception is also critically important. What others in the business/organization think about when they hear the word “actuary” is important. It’s critical that actuaries are viewed in a positive light, so that our input is valued and sought after. For example, being seen as trusted professionals who can gain valuable insights from data whilst also seeing the bigger commercial picture and environment they operate in.
We are living in a very interesting time with a lot of the drivers behind actuarial work changing at a rapid pace. Technology, data, automation, changing demographics and climate risk are all having a big impact on actuarial work.
Even though we are experts in predicting the future, no one really knows what the future of actuarial work truly looks like, but I think there will be lots of opportunities arising that allow us to be more creative and to solve bigger and more exciting problems.
I’ve written a 9 thousand word guide on this topic specifically! You can read it here.
I would suggest that anyone thinking of entering the actuarial profession should be prepared for change and build an adaptable and flexible mindset that allows you to perhaps even reinvent yourself at will. Don’t just think about ticking boxes such as passing exams, but also put immense focus on building transferable skills, constantly learning and up-skilling and doing things that will make you a valuable asset.
As mentioned in this article, I think you should also try to increase your luck surface area by getting out of your comfort zone and doing things such as proactively networking on LinkedIn or volunteering.
I think if actuaries and data scientists can understand each other better, then it may become more evident how interaction can lead to synergy. Although there are a lot of similarities between them, the two fields bring different perspectives and backgrounds to the table.
If we can become more aware of our own limited knowledge and approach problems with humility, we can learn to collaborate with others, including data scientists, in a more effective way.
One of the best habits to develop is to ask yourself “So what?” in various situations.
At the end of the day it has to solve a problem that someone cares about. Ideally, this will be an important problem that lots of people are seeking a solution to and truly care about.
I think the ever-expanding datasets and our ability to analyze these datasets with better tools and techniques is an area with lots of potential for impact. For example, a few years ago I carried out a Fulbright Scholarship in the US for 6 months where I was looking at the predictive capability of wearable technology in the insurance industry. The potential for more enhanced granular pricing with new data sources is significant and of course actuaries can add a lot of value here. However, there are many other considerations where actuarial expertise could be valuable, such as figuring out how to mitigate privacy concerns, fraud detection and regulation around the ethical use of big data sources.
I talked about risk at the start and I think this is a fascinating topic, in terms of how we view and act in the face of personal risk taking, particularly in our own personal career choices. If ‘sensible’ risk-taking is required for innovation, then things like culture and incentives play a big role. Actuaries can learn to become more comfortable with personal risk taking to help push the boundaries of what’s possible.
From my experience, many of the best things in life are not found by sticking to a rigid predetermined path, but by embracing uncertainty and sometimes going off the beaten path.
Mark Farrell is a Director and Actuary at ProActuary, visit the ProActuary website here.