Professionalism challenges
facing today’s actuary
Neil Hilary
Mumbai 18-19 June 2015
Actuaries ‘need to be
overseen’
BA price-fixing
investigation
Double rebuke to actuaries
over savings products
Worldcom's ex-boss gets 25 years
Faked BBC phone-in
competitions
What are Business Ethics?
… the application of ethical values to business
behaviour …
Identifying values
Business values
Profit
Forward
thinking
Market
Share Quality
Ethical values
Respect
Responsibility
Openness
Sales
Trust
Honesty
Performance
© IBE
Efficiency
Integrity
Reliability
Share
Price
Bonuses
League
tables
Transparency
Teamwork
Fairness
Customer
focus
Profitability
Why Bother?
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Sets the tone of the business
Underlines consistency of conduct
Underpins risk management
Competitive advantages in recruitment and
retention of staff
 Attractive to customers
 It pays! (in the long term)
Why bother?.........
Because:
Core ethical
values
Influences
conduct
Expressed in a
Code of Ethics
Reinforces
corporate
culture
Enhances
trust
& reputation
&
Reduces
risk
Sustains
financial
performance
Ethics and compliance debate
Ethics
 Prevention
 Principles based
 Values driven
 Implicit
 Spirit of the law
 Discretionary
Compliance
 Detection
 Law based
 Fear driven
 Explicit
 Letter of the law
 Mandatory
Hot Topics in Business Ethics
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Bullying & harassment
Misleading (numerical) information
Bribery & corruption
Speaking up/whistleblowing
Conflicts of interest
Marketing policies
Work/home balance
Simple ethical tests for a business
decision
 Legal
Is it allowed?
 Transparency:
Do I mind others knowing what I have decided?
 Effect:
Who does my decision affect or hurt?
 Fairness:
Would my decision be considered fair by those affected?
Some red flags
If you hear someone say any of these, you can expect
something unethical is about to happen!
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“Well, maybe just this once.”
“No one will ever know.”
“It doesn’t matter how it gets done as long as it gets done.”
“It sounds too good to be true.”
“Everyone does it.”
“Don’t worry, it’s part of the culture.”
“Shred that document.”
“We can hide it.”
“No one will get hurt.”
“We didn’t have this conversation.”
“I don’t want to know.”
Professionalism and Ethics
Sounds familiar?
Is professionalism just another name for business
ethics?
Does it have extra dimensions?
Professionalism in Practice
Professionalism concerns behaviour of
professionals and the profession which will:
 maintain the reputation and integrity of the
profession
 serve the interests of our clients
 serve the public interest (common good)
Professionalism at two levels
 professional issues facing the profession, e.g.
 responding to regulators
 helping to educate government, the media and public
 ensuring that the profession is ‘fit for purpose’
 individual matters of professionalism, e.g.
 high ethical standards
 adhering to the code and standards of practice
 reporting if necessary (whistle-blowing)
Professionalism for the individual - 1
 fiduciary relationship with client or employer
 focusing on how issues may affect stakeholders
 and bringing such issues to attention of the client
 addressing the questions the client should ask
 or which those affected may ask
 understanding and communicating well
 operating within competence and experience
Professionalism for the individual - 2
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readiness to speak your mind – not ‘compliant’
integrity in advice
prepared to report (blow the whistle) if necessary
not taking a narrow technical view
operating within code and standards of practice
demonstrating good judgement
What are people looking for in a
professional adviser?
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integrity
objectivity
knowledge
experience
being up-to-date and relevant
sound judgement
good communication
Benefits to the public of a profession
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quality assurance (education, CPD, standards)
reliability and relevance of professional advice
availability of the required service
fiduciary relationships with clients
possibility of complaint and redress
concern for the interests of third parties
Earning trust
We need to build a basis for trust, starting with
 openness
 transparency
 accountability
We need to earn respect through
 the quality of our work
 our relationships and integrity
Generic professional issues
 economy with the truth
Generic professional issues
 economy with the truth
 answering the question as asked …
???....
Generic professional issues
 economy with the truth
 answering the question as asked
 not making clear the limits of advice
Generic professional issues
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economy with the truth
answering the question as asked
not making clear the limits of advice
not considering the wider impact
…on third parties
Generic professional issues
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economy with the truth
answering the question as asked
not making clear the limits of advice
not considering the wider impact
…on third parties
 failing to blow the whistle
Unacceptable professional behaviour
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poorly founded public criticism of other actuaries
not showing respect for diverse people and views
denigrating actuaries from other traditions
rudeness or talking down to non-actuaries
Unacceptable commercial behaviour
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using position at one employer to develop another
taking commercial information to another firm
competing for business on assumptions
cutting corners to stay within budget
Where might we now be at risk?
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over-reliance on complex models
underestimating the fatness of the tail
(not) treating the customer fairly
poor communication of risk
inadequate scrutiny and peer review
conflicts of interest
Do we see ourselves as we want to
see ourselves…
…or as others see us?
Don’t let time and change overtake us!