Chapter 3 Being Professional

Profession relates to: Knowledge related; Specialized body of knowledge,

lengthy trainings, Value related; provides valuable service carried with
high standard or ethical behavior, organization related; belongs to an
organization that supports the knowledge and value related elements.

Benefits of a member of a profession:

- Members gain status and respect
- Legislation or accepted practice may specify the need to be a
member of a profession
- Government listens to you
- Mutual support among members

To earn this recognition as a profession:

- Service provides solutions to problems society considers to be
important
- Quality cannot be easily assessed before it is performed and
sometimes quality cannot be assessed even after the service is
performed.
- Service cannot be applied with a standard set of rule; best solution
on basis of deep practical knowledge and theoretical understanding
is required to fit the specific case.

Role of the professional bodies:

International Actuarial Association -> deals with actuarial issues at
international level. To be full member, the body has to have:
1. Acceptable code of conduct,
2. Acceptable disciplinary procedure,
3. Acceptable procedure of drafting and enforcing standards of
practice, if these are issued
4. Education or requirements of its fully qualified members must meet
the minimum education guidelines set out by IAA.

Professional Guidance
Code of conduct -> broad principles of how actuaries should behave, in
any area of actuarial work (e.g. are you competent to perform)

Advantages of having written standards:

- Protects the clients by ensuring actuaries do a complete and
thorough job using appropriate methods.
- Professional body will have a solid case if it has to discipline for not
following good practice
- Use checklist of what should be done
- Cannot pressure the actuary into omitting essential parts of a work
- Protection for actuaries as minimum standard of work
- Satisfy regulatory for performing a task within a given standard.
Disadvantages of having written standards:
- Difficult to apply to every case; it has to be generalized.
Monitoring standards within the actuarial profession
- Requirement to submit to professional body a self assessment of
compliance after a piece of work is completed
- Peer review

Regulatory Role of the Actuary:

- Prudential supervision; avoid loss from collapse of the institution;
provide advice or approve what has been done
- Other consumer protection; to ensure all discretionary benefits such
as with profits, surrender value/defined benefit that has to be
calculated by an actuary
- Disclosure to third parties; the amount of liabilities to be set aside
each reporting interval affects the reported profit which will be
relied on by prospect investors. Actuaries have to consider the
accounting standards in the disclosure of financial information.
- Examples of legislated roles for actuaries: -specify who is qualified
to fill the role, credentials and experience are required, set out the
responsibilities, clarify the process for reporting on these
responsibilities.
- Empower the actuary to obtain information from the institution on
whatever that is required
- Whistle blower

Appointed actuary, someone who can overview the entire work rather
than each focusing on different aspect. He/she may delegate the work to
the others but retain the overall responsibility.

Professional Issues to consider while you work on any task

- Ethical issues; behave with integrity and respect
- Conflict of interest; have to be careful with self interest and the
clients possible conflict of interest
- Consideration of other stakeholders
- Materiality; you need consider what requires the most attention ->
based on materiality
- Reliance on other experts; dont be overconfident, consult with the
experts of those field you have less experiences with

How to do a professional job

- Before you start; to have self assessment whether or not you have
the competency, time, and skills to do the tasks
- Define the task; to have clear understanding of the tasks, what is
required, what is being the main concern, the underlying
background issue.
- Collect the information you need; identify need, collect, and review
the data
- Check for reasonableness; check your own work
- Communicating the results in an appropriate format