Episode 102: Risk Management - Part 3

My guest for Episode 104 is Dave Dillon, FSA, FCA, MAAA, Senior Vice President & Principal at Lewis & Ellis and President-Elect of the Society of Actuaries. The theme for the episode is 𝗔𝗰𝘁𝘂𝗮𝗿𝗶𝗲𝘀 𝗶𝗻 𝗟𝗲𝗮𝗱𝗲𝗿𝘀𝗵𝗶𝗽 - 𝗣𝗮𝗿𝘁 𝟵.Dave and I covered the following topics:⁣✅ What inspired Dave to run for SOA President✅ Duties of the SOA President-Elect✅ SOA sections/communities and committees ✅ How Dave has benefited from posting actively on LinkedIn✅ How actuaries might be impacted by a change in administration ✅ Dave’s vision for the actuarial professionTime Markers2:00: Dave’s SOA Presidential run. 3:47: Previous downward trend in exam takers, data science as an alternative for actuaries, and modernizing the education path. 8:49: Dave’s long term vision for presidential term and beyond (tracking exam takers, positioning actuaries in wider fields). 10:48: Duties of the SOA President-Elect (executive committee, liaison to sections/communities, ambassadorship, and building relationships).15:50: SOA sections/communities and focus on professional development. 23:19: Improving SOA’s engagement with the international community (regional targeted committees). 24:37: Engaging with actuarial community on LinkedIn (sharing insights, building knowledge base, and starting conversations).29:07: How change in administrations impact actuarial work (Affordable Care Act extended premium subsidies, short-term health and hospital indemnity insurance). 33:20: Healthcare cost trends (services utilization, medical inflation exceeding general inflation).35:11: Connection between legislative changes and actuarial work (state-level silver loading, premium impacts, and repricing).39:04: Expanding the scope of the actuarial profession (HOA homeowners agreements illustration).44:28: Balancing work and life. If you are seeking to learn about the most relevant themes for the profession today, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 103 is Ronald Richman, FIA, FASSA, FeASK, CPCU, insurtech founder and thought leader in the actuarial data science movement. The theme for the episode is 𝗗𝗲𝗲𝗽 𝗟𝗲𝗮𝗿𝗻𝗶𝗻𝗴.Ron and I covered the following topics:⁣✅ Statistics, machine learning, deep learning, and generative AI ✅ Whether GLMs are statistical or machine learning models ✅ Neural nets and their applicability to insurance ✅ Reducing the risk of overparameterization for neural nets ✅ Balancing accuracy, complexity, and explainability for deep learning models✅ Smoothness and monotonicity considerations for deep learning models ✅ Applying classical actuarial concepts to deep learning ✅ Credibility transformers and how they enhance deep learning models ✅ An AI vision for the actuarial profession Time Markers1:52: Ron’s new insurtech venture and the union between actuarial science and modern technologies.4:49: Technological shift, commoditization of large language models, and uncertainty quantification. 7:35: Distinguishing between statistics, machine learning, deep learning, and generative AI. 14:00: Are GLMs considered statistical or machine learning models?17:04: Adoption and deployment trends for machine learning and deep learning models in insurance. 22:14: Neural networks, overparameterization, and regularization techniques. 28:22: Balancing accuracy, complexity, and explainability for deep learning models. 35:00: Addressing smoothness and monotonicity constraints for neural networks, post-job explanations of black box models (ICE). 40:25: Actuarial deep learning and enhancing deep learning models using credibility transformers. 46:54: What the actuarial profession can do to capitalize on the era of neural nets and generative AI.50:18: Leveraging AI to enhance productivity and improve granularity of reserving analysis. If you are seeking to explore deep learning and apply it in practice, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 102 is Monica Shokrai, FCAS, MAAA, Head of Business Risk and Insurance for Google Cloud. The theme for the episode is 𝗥𝗶𝘀𝗸 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 - 𝗣𝗮𝗿𝘁 𝟯.Monica and I covered the following topics:⁣✅ The risk management landscape for individuals and businesses✅ Working in various risk management roles at Google✅ Specific examples of risk management projects ✅ The cloud and its relevance for business ✅ Security tradeoffs between on-premises and cloud ✅ How actuaries are involved with cyber risk quantification ✅ InsideOUT data services and its connection to the cloud ✅ How technology is being used to add value in risk management ✅ How actuaries are helping tech companies innovate ✅ Keys to effective cross-functional collaboration for actuaries in tech Time Markers2:06: Risk management in simple terms, downside and upside considerations, and holistic frameworks. 4:57: The risk landscape today (cyber, AI, climate and emerging risks) and the heightened rate of change. 7:39: Insuring and transferring Alphabet’s risks, shaping contract terms and product development, and leading actuarial team. 12:42: Insurance purchasing decisions, getting business units to implement risk controls, and developing competitive intelligence.17:02: Applying actuarial principles to improve modeling that drives business decisions beyond insurance purchasing. 22:12: The cloud, cloud-based applications (Google Cloud, Workspace, Chrome) and security implications. 25:17: Security trends that drive cloud adoption (implementing high-end security features and developing a stronger digital immune system). 28:55: Risks that companies encounter when adopting cloud solutions (reliability, third-party risks, and data residency).31:18: Cyber risk quantification (frequency, severity, Monte Carlo simulation, and score framework). 34:40: InsideOUT data services (using metrics from a company’s cloud environment to rate and underwrite cyber insurance). 39:01: Using technology to help with underwriting (AI-powered security cameras for casualty insurance). 41:15: Helping businesses improve quantification, using analytics to support sales, and putting numbers behind cloud vendor security. 43:51: The importance of risk models in measuring effectiveness of technology. 47:23: Working with legal and finance and the importance of shifting perspectives. If you are seeking to understand the intersection between risk management and technology, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 101 is Marcela Granados Lavoie, FCAS, CSPA, Principal - Global Head of Insurance at Databricks. The theme for the episode is 𝗔𝗰𝘁𝘂𝗮𝗿𝗶𝗲𝘀 𝗶𝗻 𝗦𝗼𝗳𝘁𝘄𝗮𝗿𝗲.Marcela and I covered the following topics:⁣✅ Marcela’s motivation for pivoting to tech/software✅ Why a software company would need an actuary ✅ The cloud and how it enables insurance modernization ✅ How generative AI can help yield value for insurance companies ✅ Using unstructured data for underwriting, claim, marketing, and distribution ✅ Marcela’s experience learning R and Python ✅ Programming and coding proficiency actuaries need today✅ Tips for actuaries, data scientists, and data engineers to work collaboratively✅ Origins and motivations for the Organization of Latino ActuariesTime Markers1:30: Transition from consulting to tech/software (impact of legacy systems on consumer sentiment, shifting policyholder expectations, and personalized experiences). 5:21: Where actuaries add value in tech/software (strategic conversations, becoming trusted advisors, speaking language of insurance, and understanding customer pain points).7:10: Connecting horizontal product features to vertical insurance functions, understanding and quantification of customer use cases.12:10: Databricks as a data and AI platform for ingestion, transformation, curation, servicing, and consumption into downstream applications.14:40: Databricks’ compute capabilities (moving beyond batch to streaming), separating compute from storage, and evolving from ETL to business outcomes.16:11: Global Head of Insurance role (qualifying opportunities, briefing executives, influencing product direction, building solution accelerators, and demonstrating platform capabilities).24:01: Databricks’ customer profile, the rise of semi-structured data, and integration with other technologies.30:25: The cloud, the rise of big data (volume, variety, and velocity), modernization, and cloud migration trends.37:18: Generative AI explanation and homeowner’s premium modeling illustration (GLMs vs. neural networks).44:10: Generative AI use cases (accident descriptions, product recommendations, coverage verification, underwriting appetite, claim reporting, measuring intent, and customer triaging).49:36: The importance of programming and coding, open-source (R and Python), and combining programming languages with generative AI (ex. CoPilot).54:56: Collaborative illustration with actuaries (business hypothesis and analysis), data scientists (model fine tuning and algo testing), and data engineers (building data pipelines).1:01:18: The Organization of Latino actuaries, origins, and motivations.If you are an actuary seeking to work in technology/software, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 100 is David Wilkie, CBE, FFA, FIA, FSS, FIMA, Hon D Sc, Hon D Math, Chairman at InQA Limited. The theme for the episode is 𝗔𝗰𝘁𝘂𝗮𝗿𝗶𝗲𝘀 𝗶𝗻 𝗥𝗲𝘀𝗲𝗮𝗿𝗰𝗵 - 𝗣𝗮𝗿𝘁 𝟮.David and I covered the following topics in 𝗣𝗮𝗿𝘁 𝟮 of this historic episode:⁣✅ Modeling uncertainty within insurance, finance, and risk mgmt✅ Shortcomings of the Black-Scholes option pricing model✅ The origins and evolution of the Wilkie Model for economic variables✅ Realistic disaster scenarios for marine insurance ✅ The financial crisis, agency risk, and model hazard ✅ Helping to shape actuarial standards and practice globally ✅ David’s new unreleased research paper 𝗣𝗮𝗿𝘁 𝟮 Time Markers1:25: Random walk hypothesis and modern financial economics. 2:49: Unit-linked life insurance policies and connection to share price uncertainty. 6:30: Foundations of the first Wilkie Model (retail prices, dividends, dividend yields, and long-term interest rates). 8:40: Limitations of Black-Scholes option pricing model assumptions (share price, transactions costs, and hedging constraints).13:25: The key innovation for the first Wilkie Model (incorporating stochastic framework, variability, variable interrelations, and autoregressive methods). 16:30: The second Wilkie Model (short-term interest rates, property, property yields, and foreign exchange rates).19:05: Index-linked yields and modifying long-term interest rate assumptions. 22:02: Incorporating company earnings and payout ratios (dividend payout and price/earnings) into Wilkie Model. 23:56: Realistic disaster scenarios, evaluating extreme losses for oil industry, and Lloyd’s syndicate as-if reserves. 30:16: Incorporating parameter uncertainty into Wilkie Model (hyper model approach). 32:51: Using fatter tail distributions (Normal, hyperbolic, and Laplace) for variables with extreme values and high kurtosis.38:06: Transparency challenges around economic scenario generation. 39:03: Packaging of mortgages leading up to 2008 financial crisis and resulting implications. 42:32: Misaligned incentives in corporate taxation (interest payment deductions).   46:33: Involvement with actuarial and scientific organizations. 50:30: Approved directive for life insurance valuation principles to address country-level disconnects.52:26: Research that David hasn’t done yet but intends to do. If you are an actuary interested in research, modeling, and programming, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 100 is David Wilkie, CBE, FFA, FIA, FSS, FIMA, Hon D Sc, Hon D Math, Chairman at InQA Limited. The theme for the episode is 𝗔𝗰𝘁𝘂𝗮𝗿𝗶𝗲𝘀 𝗶𝗻 𝗥𝗲𝘀𝗲𝗮𝗿𝗰𝗵 - 𝗣𝗮𝗿𝘁 𝟮.David and I covered the following topics in 𝗣𝗮𝗿𝘁 𝟭 of this historic episode:⁣✅ David’s early childhood and formative years✅ What motivated David to become an actuary✅ Building a strong foundation for academic research✅ Mortality forecasting for the Committee of Mortality Investigation✅ Early development of life and annuity tables✅ The Financial Times Actuaries British Government Securities Indices✅ Multi-state modeling for income protection insurance✅ Mortality modeling for the COVID-19 Working Party✅ Promoting the power of programming as an early adopter✅ The evolution of programming in insurance and risk management✅ The most significant development in the actuarial profession𝗣𝗮𝗿𝘁 𝟭 Time Markers2:34: Early years in Glasgow, education in Lancaster and Cambridge, and national service. 8:24: First actuarial role at Allianz Life in Stuttgart, actuarial exams, and qualification journey.10:15: First programming experience with Ferranti Pegasus computer at Standard Life. 20:03: Early involvement with the Committee of Mortality Investigation (CMI). 22:23: Writing Fortran programs to produce graduated mortality tables. 24:58: Gompertz-Makeham model for force of mortality. 27:31: Developing share indices for the Joint Investment Committee. 32:35: Multi-state modeling for income protection insurance and epidemics. 43:04: Using historical mortality rates in Sweden, Spain, and Switzerland for COVID-19 modeling. 45:17: Fitting Lee-Carter model to population data and using time series to analyze time coefficient.48:10: Using mixture models to account for kurtosis in COVID-19 data. 51:44: Using stochastic methods for modeling small pension funds. 54:02: Programming and coding today.56:06: The impact of computers on the actuarial profession. If you are an actuary interested in research, modeling, and programming, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 99 is Julia Lessing, FIAA, Director at Guardian Actuarial.The theme for the episode is 𝗔𝗰𝘁𝘂𝗮𝗿𝗶𝗮𝗹 𝗖𝗮𝗿𝗲𝗲𝗿𝘀 - 𝗣𝗮𝗿𝘁 𝟮.Julia and I explore the following topics:⁣✅ The actuarial profession in Australia✅ The market for new graduates and qualified actuaries in Australia✅ Opportunities for actuaries in data science and non-traditional roles✅ The impact of generational dynamics for future actuaries✅ Transitioning from individual contributor to manager✅ Tips for actuaries leading a team for the first time✅ Tips for actuaries presenting results to stakeholders ✅ Tips for actuaries managing high-quality technical work✅ Communication and leadership traits to be an effective actuary✅ Retraining, upskilling, and future-proofing actuarial careersIf you are an actuary interested in building a dynamic and resilient career, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 98 is Cathy Lyn, FIA, FSA, IFoA Council Member and Retired Actuary.The theme for the episode is 𝗤𝘂𝗮𝗻𝘁𝗶𝘁𝗮𝘁𝗶𝘃𝗲 𝗣𝗿𝗼𝗳𝗲𝘀𝘀𝗶𝗼𝗻𝗮𝗹𝘀.Cathy and I explore the following topics:⁣✅ Running for IFoA Council and what she seeks to contribute✅ Nurturing a competitive quantitative workforce✅ The importance of mathematical rigor in society✅ Why quantitative professionals need to have a seat at the table✅ How quantitative professionals make countries more competitive ✅ How actuaries and engineers can work together to develop systems✅ Quantitative opportunities in housing, transportation, and agriculture✅ Changing societal attitudes towards paying for competency✅ Closing educational gaps in developing a quantitative workforce ✅ The importance of industry-academia collaboration for quants✅ The importance of mentorship and professional networks for quantsIf you want to understand how quantitative professionals make a difference in society, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 97 is Lewis Kemp, CEO at Lightbulb Media.The theme for the episode is 𝗖𝗼𝗻𝘁𝗲𝗻𝘁 𝗠𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴.Lewis and I explore the following topics:⁣✅ Content marketing and its relevance in the modern era✅ Content creation and its importance for professionals ✅ The three stages of the conversion funnel✅ How individuals can apply the conversion funnel to their own careers✅ How individuals can find their target audience✅ Developing success criteria around content creation✅ Keys to cultivating a relationship with a target audience ✅ Keys to finding your authentic voice when creating content✅ Fundamentals for individuals getting started with content ✅ Overcoming nerves and limiting beliefs around content creationIf you are curious about creating content and not sure where to start, you want to listen to this.My Website: maverickactuary.com

My guest for Episode 96 is Don Grimm, FCAS, Principal and Consulting Actuary at Archer Actuarial Consulting.The theme for the episode is 𝗘𝘅𝗰𝗲𝘀𝘀 𝗖𝗮𝘀𝘂𝗮𝗹𝘁𝘆.Don and I explore the following topics:⁣✅ The connection between excess casualty and primary lines✅ Target classes of business and coverage scope for excess casualty✅ Capacity, rate dynamics, and trends in the excess casualty market✅ Key differences between excess casualty and umbrella insurance✅ Tradeoffs between excess casualty and reinsurance✅ Evaluating attachment points and limits for excess layers✅ Unique risk dynamics and exposure attributes for excess casualty✅ Risk loads for casualty lines of business ✅ The life cycle of an excess casualty program✅ Actuarial reserving considerations for excess casualtyIf you work in property and casualty insurance, especially on the liability side, you want to listen to this.My Website: maverickactuary.com