Risky business: what's it like being the Government Actuary?
From pensions to student loans, actuaries play a vital role in analysis risk right across government. Here, the government actuary explains his work
When I was made government actuary over two years ago, my brother had to be persuaded that the role was not an archaic ceremonial one, complete with its own special livery. Attractive thought though that may be, the real story is that as the ninth holder of my office, first created in 1917, I lead a specialist group of advisers in the Government Actuary’s Department (GAD) that provide high quality analysis to many Whitehall departments and other public sector bodies.
I find that actuaries are more easily described by what they do rather than what they are. As a profession we owe our origins to the mathematical and statistical techniques that developed the financial management of the early life insurance companies. Pricing and valuing such risks requires skills in evaluating mortality data and investment markets in particular, exercising judgement and using techniques that were appropriate for the data and business resources available at the time.
These same largely quantitative skills, combined with good business judgement, subsequently came to be used in the fields of pensions and increasingly nowadays in general insurance, risk and investments. And with GAD, we have a well-established presence within the civil service.
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In actuarial terms I am a versatile “Jack of all trades” since my career has spanned a wide spectrum of these areas of work. I spent many years working in the insurance market as an actuary and in general management before my eight-year public sector “sampler” as lead executive for investments, risk and actuarial at the highly successful Pension Protection Fund. This led somewhat naturally to my now “total immersion” into the civil service as government actuary.
Modernising the actuarial function
Over the years my professional development was supplemented with commercial experience and I was also fortunate to have had a spell at Harvard Business School to broaden my general management horizons. I believe that this commercial management heritage is invaluable in helping me address the challenges of modernisation that will maintain the Government Actuary’s Department’s relevance in future.
In many ways modernisation means greater efficiency and better value for our clients. The ability to manipulate data accurately and effectively is being commoditised in my field as it is in many others and we at GAD are heavily engaged in the organisational development to yield operational efficiencies.
But the ability to make effective analysis and deliver appropriate and timely advice remains vital. And, in my opinion, the actuarial value-add is the ability to see a bigger picture, especially where there are long-term risks and uncertainties to understand; it is here where we can apply the judgement that enhances the analysis. So, hand in hand with the improvement in processing efficiency, consistency and timeliness, we are developing the skills of our actuaries to pursue our “ADEPT” values of Agile, Dedicated, Expert, Partnering and Trusted.
Working right across government
My own personal challenge has been to understand the complexities of Whitehall as these provide the context for the work we do with clients. Whilst I may have a good set of tools to use, as a civil servant I need to find the most appropriate opportunity to use them. My approach is not to lecture, but to listen and to learn from those with more experience who already know more about government than I will ever learn during my time as government actuary.
I am equally willing to defer in technical and specialist actuarial knowledge to the many experts that GAD has. And with good reason. At the time of writing my colleagues are engaged, amongst other work, in the massive exercise of valuing and advising on the 19 separate public service pension schemes with liabilities of over £1.5 trillion and some 12 million members; completing my report on the mathematics of future State Pension age increases; and in developing a multi-state model to estimate future cash flows for various tranches of the student loan book.
It’s impossible to say that our work isn’t important when it touches on these major aspects of public life and affects so many of our fellow citizens. And there is not a ceremonial uniform in sight!
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