Actuaries at the top: standing on the shoulder of giants

The actuarial profession is traditionally viewed as a technical and specialist field, focusing on the intricacies of insurance products, risk management, and financial reporting. Actuaries are known for their analytical abilities, proficiency with numbers, and understanding of complex financial systems, which makes them invaluable in the realm of insurance and financial services. However, despite these considerable strengths, the trend of actuaries ascending to executive and senior management roles, beyond the traditional Chief Actuary position, has seen a noticeable decline. To reverse this trend and unlock the full executive potential of actuaries, it is crucial to identify and cultivate a set of skills and experiences that extend beyond their technical expertise.

Strategic Business Acumen

To reach the upper echelons of corporate leadership, such as CEO, CFO, CRO, or COO, actuaries must develop a keen sense of strategic business acumen. This involves a deep understanding of the broader business environment, market dynamics, competitive strategies, and customer behaviors. They must be able to foresee market trends and align their company’s strategy accordingly. Gaining experience in strategic roles or participating in strategy development can provide actuaries with insights into how business models can adapt to changing environments.

Leadership and People Management

Executive roles require the ability to lead and manage people effectively. Actuaries should develop strong leadership skills, which include the ability to inspire, motivate, and guide teams towards achieving organizational goals. This also involves managing diverse teams, nurturing talent, resolving conflicts, and fostering a positive corporate culture. Experiences such as leading projects, mentoring junior staff, or taking on roles in professional societies can be valuable.

Financial Mastery Beyond Actuarial

While actuaries are well-versed in financial reporting and risk management, executive roles often require a broader financial perspective. This includes corporate finance, investment strategy, capital allocation, and understanding the implications of financial decisions on the overall health of the business. Actuaries can benefit from roles or training that expose them to these wider financial disciplines.

However, the biggest challenge here is that mastery over actuarial is itself a huge task. Usually, studying and passing exams takes up most of the good years of a person’s professional life and that time is diverted from innovation to studying for exams. After qualification, the level of energy reduces and sense to get settled prevails to reap the benefits of initial struggles. Increase in seniority and pay also arrives by the time of qualification so incentive to leave all this behind only to start from scratch somewhere else becomes very low. This doesn't mean that paper exams should be abolished. However, there should be a reduction in the time required to qualify. Additionally, curriculums need to be updated to meet modern requirements. This update should include a focus on comprehensive subject matter and higher-order skills, moving away from lower-order skills like memorization.

Regulatory and Compliance Knowledge

A comprehensive understanding of the regulatory landscape and the ability to navigate it is essential for senior executives. This is particularly relevant in industries like insurance, where regulations are stringent and complex. Actuaries should stay abreast of regulatory changes and consider roles or courses that deepen their understanding of compliance issues.

Operational Expertise

For a COO role, understanding the operational aspects of a business is critical. Actuaries looking to move into such positions need to build experience in managing operations, which may include supply chain management, process optimization, and technology deployment. Involvement in operational projects or rotations through different business units can provide this experience.

Communication and Influence

The ability to communicate complex ideas in a clear and persuasive manner is a vital skill for any executive. Actuaries must be adept at translating technical data into actionable business insights and influencing decision-making at the highest levels. They should also be able to engage with stakeholders, including investors, regulators, and the board of directors. Public speaking engagements, participation in cross-functional teams, and advanced communication training can help actuaries refine these skills.

Change Management

Executives are often at the forefront of driving change within an organization. Actuaries should be comfortable with leading change initiatives, which require a combination of strategic vision and the ability to manage the human side of change. Experience with organizational transformation projects or change management courses can be beneficial.

Innovation and Technology

In an era where technology is disrupting traditional business models, executives need to be champions of innovation. Actuaries should embrace new technologies, such as artificial intelligence, machine learning, and predictive analytics, and understand how they can be leveraged for strategic advantage. Hands-on experience with innovation projects or technology management can prepare actuaries for this aspect of executive leadership.

Networking and Relationship Building

Building a strong professional network is crucial for any executive. Actuaries should actively build relationships within and outside their industry, which can open doors to new opportunities and provide insights from different perspectives. Engaging with industry forums, conferences, and other networking events is a good way to build these connections. One aspect that is under-looked is senior actuaries developing junior actuaries reporting under them in mentoring and grooming them into leaders of the future. In the absence of inter-generational transfer of skills as well as providing platform for the younger generation to shine, it is likely that current trend of decreasing leadership positions for actuaries will likely continue. The older generation has the power, platform and experience but not the time, energy and enthusiasm for new initiatives and it is the opposite with the younger generation. A collaboration between them can play to each of their strengths to achieve shared value win-win situation that is better than a zero-sum game.

Continuous Learning and Adaptability

The business world is constantly evolving, and executives must be lifelong learners to stay ahead. Actuaries should pursue ongoing education, whether through formal qualifications, such as an MBA, or through less formal means, such as reading, workshops, or online courses. They should also cultivate an adaptable mindset, ready to pivot when business needs or market conditions change.

Conclusion

Actuaries possess a strong foundation of skills that are highly relevant to executive and senior management roles. However, to transcend the perception of being purely technical specialists and to ascend to the highest levels of corporate leadership, they must broaden their skill sets. By developing strategic business acumen, leadership qualities, operational expertise, and a host of other competencies, actuaries can not only prove their value beyond traditional roles but also lead their organizations to new heights of success. As the business landscape continues to evolve, actuaries who invest in these areas of development will find themselves well-equipped for the dynamic and challenging roles of CEO, CFO, CRO, and COO. While it's commendable for current leaders in the actuarial field to build upon the achievements of their predecessors, it's equally important for them to reach out and assist the younger generation, helping to elevate their careers and continue the legacy of innovation and excellence.