The Dutch Actuarial Institute (AI) is completely renewing the basic actuarial program. One of the important changes is that risk management will be integrated into the program and will be combined with soft skills. ‘More and more actuaries work as risk managers,’ says Estelle Jonkergouw. She is the Director of Studies of the Actuarial Institute’s Executive Master of Actuarial Science (EMAS). Dr Jonkergouw has to make sure the basic program offered by the Actuarial Institute (AI) provides a smooth transition to the master program.
To arrive at a renewed basic program, the AI first consulted the financial sector. It emerged from this, for instance, that employers prefer actuaries with a good grounding in risk management. This area of expertise has become increasingly important to financial institutions, mainly due to new regulations, such as Solvency II and the Financial Assessment Framework.
“The basic program in its present form might have paid too little attention to risk management“, in Estelle Jonkergouw’s opinion. If you do not study further in risk management, your knowledge of risk management will not be sufficient. The renewed program will change this. Besides that, the transition from the basic program to both the EMAS master’s program and the CERA (Certified Enterprise Risk Actuary) program, which is the in-depth program in the area of risk management, will be better.’
On January 1, 2014, the fourth cohort of students started EMAS. Alfred Slager is the Academic Director of this master’s program. Together with Estelle Jonkergouw, he looked at ways of improving the link between the two programs. The links were sought at the subject level. In relation to each subject, the question they asked themselves was whether the requirements of the basic program correspond to the entry level assumed by lecturers of the EMAS program. “There are some differences there“, according to Slager, “but they can be bridged.“
“There are all sorts of developments occurring that make the job of an actuary more exciting and interesting, which is also a reason why the bar is being raised“, Slager continues. One of these developments is risk management. “Traditionally actuaries have implicitly been risk managers. In recent years, however, we have identified their role and added value for the organisation much more clearly and explicitly.“
According to Jonkergouw, “Solvency II regulation, for example, demands explicit risk policies. This is one of the reasons why risk management should be a substantial part of the basic program. However, social skills should also be a part of this, since it is not just about numbers. Soft skills, social skills, are also important. You need to be able to interpret quantitative data properly, develop arguments and report on your results. How do you write a clear report, for instance? How do you discuss it and vary the way you do so when reporting to your manager, the board of directors and the supervisory board?“
“To develop soft skills such as these, EMAS works with cases which not only cover numerous knowledge domains, but also cover numerous competences. These may be cases on negotiating and dilemmas, for instance, in which roles are assigned to students. In these cases, students learn about themselves and about how they can act best in certain circumstances. In the new basic program, soft skills will also be integrated into the theoretical subjects to ensure that the development of soft skills is more closely related to professional practice.“
“For didactic reasons, the EMAS program increasingly makes use of simulations“, says Slager. “You can approach the hedging of risks theoretically when dealing with derivatives. From a practical point of view, however, the subject and choices are less simple. What choices will you make when market movements are extreme? And what will that do to you? These are aspects you cannot easily learn from books. Actually, actuaries are already developing the desired soft skills in practice. Twenty-five years ago, only numbers were presented, so to speak. Nowadays actuaries provide more information on the dilemmas you have to solve and how to do so.“
Jonkergouw: “Actuaries have to develop these abilities further, although they will also still be needed for their mathematical abilities. Risk management will always have a grey area in which soft skills are essential. How do you enter a debate on whether or not to take risks? The development of these competencies is an important part of the revised program.“
Slager: “Specialization will take place. Which work does the actuary like most? For example, some actuaries do not like talking to a board of directors.“ Jonkergouw continues, “Possibly an actuary such as this could be assigned a different role. He could, for instance, produce reports, while someone else takes responsibility for communicating the reports. Being aware of your own competences is also very important, i.e., that you are unable to do something or simply do not like doing it.“
According to Slager, “It will always be possible to find responsibilities you do like. Besides, most students actually express their desire for the broader role.“
Actuaries increasingly seem to progress towards positions in risk management. The differences between the roles of the actuary and the risk manager are not well defined, according to Estelle Jonkergouw. “The Actuarial Institute will have to consider this. Maybe I am venturing into dangerous territory, but should not all actuaries become risk managers?“
Slager: “Maybe they have always been risk managers. Both professions have a broad perspective. Actuaries can deepen their knowledge in particular areas. They are aware of the foundations on which a story is based and what the consequences and their interrelationships are. That is extremely valuable.“
Text by: Paul Jurriëns