Current CAS Initiatives
Robert F. Wolf, FCAS, MAAA
CAS Board of Directors
Casualty Actuaries of the Southeast (CASE)
Fall 2005 Meeting, October 10, 2005
Ritz-Carlton Hotel at Buckhead
Atlanta, GA
Monday, October 10, 2005
Agenda
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CAS Centennial Goal
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ERM Initiatives
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Research Working Parties
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Other Topics
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Task Force on Actuarial Credibility
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Task Force on Publications
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Basic Education Initiatives
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Continuing Education
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Image of the Actuary Campaign
Your Input
CAS Centennial Goal
The CAS will be globally recognized as the
preeminent resource in educating casualty
actuaries and conducting research in casualty
actuarial science. CAS members will be
recognized as the leading experts in the
evaluation of hazard risk and the
integration of hazard risk with strategic,
financial and operational risk.
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Implementing the
Centennial Goal
Centennial Goal Implementation Task Force
Subcommittee of Long Range Planning Committee
 Working with Vice Presidents and Committee
Chairs in setting goals.
 How does my committee and its goals support the
Centennial Goal?
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SAM Goals
Significant, Attainable, Measurable
 Interim milestones to help gauge progress towards
the Centennial Goal.
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ERM Initiatives
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During its March 2005 meeting, the CAS Board
took actions to help the actuarial profession
benefit from new opportunities in Enterprise
Risk Management (ERM)
Approved Joint CAS/SOA Risk Management
Section.
 Launched partnership with Enterprise Risk
Management Institute International, Ltd. (ERMII).
 Created new Vice President-Risk Integration
position to oversee ERM-related activities.
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Risk Management Section
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Similar to the existing CAS special interest
sections CARe and AIR.
Both CAS and SOA members are eligible to
serve on the Council that guides the activities of
the Section.
Members are encouraged to join the Section.
Annual dues are only $20.
Look for the check box on the CAS dues notice
in October.
Other ERM Initiatives
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ERMII is a private, not-for-profit, independent
educational and research organization led by
CAS Fellow Shaun Wang.
ERMII is co-sponsored by an international
group of universities and professional
organizations including Georgia State University,
University of New South Wales, University of
Illinois, Wuhan University (China), and the CAS.
VP-Risk Integration to oversee and coordinate
ERM-related activities.
CAS Strategies
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Take the Lead – More vigorous effort
Expansion of Research
 Publications
 Public Relations
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A Though (Idea)Develop Global Journal of ERM
 Joint Sponsorship with ERMII
 Outreach to all Professions
 Research Topics, such as Operational Risk
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CAS ERM Definition
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“The discipline by which an organization in any industry
assesses, controls, exploits, finances and monitors risk
from all sources for the purpose of increasing the
organization’s short- and long-term value to its
stakeholders”
Key elements:
Dual nature of risk
 Value creation
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CAS ERM Conceptual
Framework: Two
Dimensions
Risk Type
 Strategic
 Operational
 Financial
 Hazard
Risk Management
Process Step
 Establish
context
 Identify risks
 Analyze/quantify risks
 Integrate risks
 Assess/prioritize risks
 Treat/exploit risks
 Monitor and review
Actuarial Techniques in the
Broader ERM World
Credit
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Risk
One of the established methods is
called the “actuarial method”
# of borrowers by rating category
= exposure
Default rate by rating category =
frequency
Defaults = claim count
Loss given default = severity
Operational
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Risk
Basically an internal actuarial study of
loss-generating events
State-of-the-art is basically re-created
“Basics of Actuarial Analysis”
Dr. Ali Samad-Khan’s presentation
from the 2004 ERM Symposium
www.casact.org/coneduc/erm/2004/
handouts/samad-khan.pdf
Modeling Workshop
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Education in risk integration techniques is
consistent with Centennial Goal.
DFA added to Syllabus in 2000.
 DFA taken off Exam 8 in 2003 due to inability to
test in a paper-and-pencil environment.
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Modeling Workshop Task Force established.
Piloting a hands-on workshop experience, with the
final pilot conducted with new Fellows in May 2005.
 Consider adding this as a future FCAS requirement
and/or continuing education opportunity.
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FCAS Education
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Task force established in late 2004 to
recommend “Learning Objectives” for what it
means to be an FCAS in the year 2014.
Considerations
Perhaps reducing total number of exams by one (i.e.,
8 exams plus VEE).
 include a mandatory workshop (e.g., DFA Modeling
Workshop).
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Final Recommendations due to CAS Board in
November 2005.
Research Working Parties
2003-04
 Correlations and Dependencies Among All Risk
Sources
 Executive-Level Decision-Making Using
Dynamic Risk Modeling
 Elicitation and Elucidation of Risk Preferences
 Quantifying Variability in Reserves Estimates
Research Working Parties
2004-05
 Dynamic Risk Modeling Handbook
 Public-Access DFA Model
 Bornhuetter-Ferguson - Initial Expected Losses
 Tail Factors
 Risk Transfer Testing
Bottom Line
1.
2.
3.
4.
Actuaries are the top candidates for ERM
leadership in insurance and pensions
We need to stop thinking protectionist and
embrace expansion fearlessly and
confidently
Let’s lead, not follow
Actuaries must reframe traditional roles as
part of the larger ERM context
Other Topics of
Interest
Your Inputs are Welcome
Task Force on
Actuarial Credibility
Established to identify, prioritize, and
investigate the feasibility of possible
strategies for enhancing the perceived
credibility of the actuarial profession and to
develop action plans for implementation of
those strategies considered to have the
greatest potential for high impact.
Task Force on
Actuarial Credibility
1.
2.
3.
Enhance the transparency of the actuary’s
conclusions by clearly identifying differences
between management’s “best estimate” and the
actuary’s “best estimate.”
Enhance the public’s understanding of actuarial
estimates.
Improve the transparency of disclosures by
requiring that the actuarial report contain an
exhibit that summarizes changes in the actuary’s
estimates from one period to the next.
Task Force on
Actuarial Credibility
4.
5.
6.
Enhance the quality of corporate governance by
educating audit committees or board of directors or
both on the roles and responsibilities of the appointed
actuary.
Enhance the self-governance of the profession by
requiring the appointed actuary to provide an
explanatory document with the ABCD whenever the
change in the actuary’s reserve estimates over a defined
period exceeds certain predetermined thresholds..
Elevate the unique role of the appointed actuary within
the statutory financial reporting environment by
incorporating an Actuarial Statement within the Jurat
Page of each company’s Annual Statement.
Task Force on
Actuarial Credibility
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Task Force Report presented to the CAS Board in
May 2005.
Board accepted the Report and directed the
Executive Council to consider the
recommendations and implement them as
appropriate.
Follow-up report due to Board in November 2005.
Report available on CAS Web Site.
Member comments and input are welcome.
Task Force on
Publications
1.
2.
3.
4.
Remove papers from PCAS. Keep CAS-specific
content and add Yearbook content.
Create a yearly Membership Directory
publication as a separate soft-cover publication.
Create a new journal called the Journal of
Casualty Actuarial Science where refereed papers
will be published.
Encourage non-CAS members to publish in the
Journal; actively solicit articles from around the
world
Task Force on
Publications
5.
6.
7.
8.
Continue to publish the Forum in hardcopy if it is
economically feasible and subscribing members pay the
full cost of producing and distributing it.
Change the name of the Forum to The Forum: A
Clearinghouse for Expressing Ideas and Stimulating Discussion.
Create a process to publish monographs (e.g.,
collections of study notes, call papers of particularly
high quality and focused on one topic).
Produce an international monograph in 2007 to
commemorate the ASTIN Colloquium.
Basic Education
Starting Spring 2005
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Prerequisites: Linear Algebra and Calculus
Validation by Educational Experience:
Economics, Finance, Applied Stats
Exam 1: Probability with Calculus (3 hours)
Exam 2: Interest (2 hours)
Exam 3: Actuarial Models & Statistics (4 hours)
Exam 4: Actuarial Modeling (4 hours)
VEE Options
1.
Approved university course (grade of B- or
better)
2.
Approved exams (e.g., AP exams for Micro and
Macroeconomics, CFA exams, CAS transitional
exams).
Other approved experiences (courses/seminars
designed specifically for VEE credit.)
3.
Computer Based Testing
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Candidates take exam at a standardized testing
center.
Can schedule exam any time during a specified
period (e.g., three days).
Software tutorial provided online and before
exam begins.
User friendly software with easy navigation.
Potential for immediate grading.
CBT Implementation for
Exam 1
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May 2005 - standard paper and pencil exam.
September 2005 - CBT (paper and pencil
backup for areas without CBT centers).
November 2005 - no exam.
2006 - 4 to 6 CBT administrations.
Immediate release of grades beginning some
time in 2006.
Rollout to other exams in future years.
Code of Professional
Conduct
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Beginning in 2006, candidates taking CAS
Exams 3, and 5-9 will be required to agree to
abide by the terms and conditions of the CAS
Code of Professional Conduct.
Recognizes that candidates who have not yet
achieved Associateship perform responsible
actuarial work and that this work should be done
within the framework of the Code.
Research Working Parties
Research “task forces”
 Process should result in quality work
products.
 Brings together the research energy of
individual researchers.
 Proven to be effective for GIRO, the
general insurance research organization of
the Faculty and Institute of Actuaries
(UK).
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Continuing Education
AAA Exposure Draft recommends that the
Qualification Standards apply to all “statements of
actuarial opinion” defined as follows:
… an opinion expressed by an actuary based upon actuarial
considerations, and intended by the actuary to be relied upon by
the outside person or organization to whom the opinion is
addressed. The phrase “outside” person or organization refers to
persons or organizations other than the actuary’s direct employer.
A statement of actuarial opinion, although usually
conveyed in writing, may also be conveyed orally.
2005-06 Calendar of Events
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Seminar for the Appointed Actuary
(with the CIA), September 22-23, Montréal
CAS Annual Meeting
November 13-16, Baltimore, MD
Online Course on Financial Risk Management
November 4-20, CAS Web Site
2006 Seminar on Ratemaking
March 13-14, Salt Lake City
Image of the Actuary Campaign
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Profession-wide campaign.
Image Advisory Group, made up of members from each of the
North American actuarial organizations, oversees campaign.
Campaign kick-off CD ROM sent to all actuaries.
www.imageoftheactuary.org/ for more information.
I welcome your input
regarding . . .
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CAS Centennial Goal
ERM Initiatives
Task Force on Actuarial Credibility
Basic Education Initiatives
Research and Publications
Continuing Education
International Issues
What’s On Your Mind?
Questions?
Thank You!
Robert F. Wolf, FCAS, MAAA
Principal, Mercer Oliver Wyman
10 South Wacker Drive, Suite 1700
Chicago, IL 60606-7500
312 930 0648 Fax 312 930 0641
Mobile 312 560 5228
rwolf@mow.com
www.merceroliverwyman.com