(Posted by Guest Blogger, and James's Own "Mini-Me", Ian Turvill.)
I ran across an article today which reminded me of the importance of having analytical tools that can do much more than simply developing robust statistical models. Insurance Networking News described a report released by the Insurance and Actuarial Advisory Services (IAAS) practice of Ernst & Young LLP that shared the results of a report created after a recent "Actuarial Transformation Roundtable".
The roundtable is formed from senior actuaries and IT professionals. Its aim to find better ways of aligning the two departments in order to meet the heightened business demands, such as: increasingly complex products, extensive SOX compliance requirements, the shift from rules-based to principles-based valuation, and the growing volume of data.
Two particular observations from the report jumped out at me:
"Actuarial participants stressed the tension that exists around the flexibility required to make changes quickly and the need to maximize the advantages of more structured IT development and change management approaches." [my emphasis.]
"One suggestion, which received positive feedback from the group, was creating a "model steward" position with the role of introducing standards for model coding and ensuring the use of a common language through the management of models, assumptions, testing and validation." [again, my emphasis.]
As part of my evil plot to take over the world, I suggest the Actuarial Transformation Roundtable should take a look at the principles and approaches of Enterprise Decision Management. EDM would give actuaries the flexibility they need to change their modeling approaches, without unduly impacting the IT function's efficiency, productivity, and commitment to a structured environment. Similarly, the use of a common, centralized repository for rules and models would allow the insurer's to accord to the standards set out by a "model steward", while also applying them directly within the operations of the business.