61 TIPS FOR YOUNG ACTUARIES
Tip 60 “We live in a world of uncertainty. Use judgement, not models.“
Our probabilistic models do not capture all the risks inherent in our adaptive complex systems.
Our risk models are reliant on stationary probability distributions with known and assumed parameters. This is seen often in our value at risk and longevity models. But these models do not mirror the real world as there are risks which sit outside these models and the models themselves are a source of risk – so called model risks. We can be lured into a false sense of comfort by excessive accuracy when the real uncertainty lies elsewhere.
For example, the Northern Rock Building society was hailed as extremely secure weeks before its collapse in 2007. As were many financial institutions. The rating agencies, auditors and risk managers were just turning the handles, in the limited contexts of their assessment and risk models.
We are often faced with ill-defined and complex problems, which are wicked, as the world has become more interconnected, complex and globalised. The risk of financial , physical and social contagion have multiplied and speeded up. The complex systems had become non-stationary (assumed probability distributions are not realistic and constantly shifting) and non-linear ( financial and social economic impact are geometric and can be catastrophic). Very often the effects are regressive as they affect the most vulnerable disproportionally.
Frank Knight made the now classic distinction between risk – where it is possible to define measurable probabilities over a large number of cases that the unexpected will and fundamental (radical) uncertainty which is not amenable to measurement in probabilistic terms.
Our recommendations by definition has to be contextual, and we have to invoke the shared narratives within and outside that context. That requires courage, large world thinking and judgment.
61 TIPS for Young Actuaries
1. Congratulations on becoming an actuary. It is the beginning of life-long learning.
2. The first principle of success is constancy of purpose
3. The second principle is drive, focus and determination.
4. Imagine what is possible with your life.
5. Success is inevitable to the person with unlimited enthusiasm. Read Napoleon Hill’s “Law of Success”.
6. If you face challenges or failures, regard them as learning opportunities. Never give up.
7. Develop the art of speaking well in public. Dale Carnegie’s book on “Developing Self Confidence in Public Speaking” is still the best around.
8. Have a strategy on your career. Pursue it with passion. Passion is at the heart of excellence.
9. Take ownership of your work. Go the extra mile for the work you are given.
10. Be Responsible. As a person and in all the roles you take on.
11. Always prepare. If you fail to prepare, you are preparing to fail.
12. Be the solution to the problem. Do not be the problem.
13. Be the go-to person in your workplace. This is not difficult. Use C.A.D.I.F. – Committed, Attention to Detail and Immediate Follow Up – this is from Mark McCormack’s “What they do not teach you at Harvard Business School”.
14. Be a pioneer. Be bold. Without courage, there will be no progress.
15. Travel and work elsewhere. It will help you understand we are all different and we are all the same.
16. Have a a financial savings program. You are as rich as you save, not as you earn.
17. Acquire assets not liabilities. Learn to say no to stuff which do not matter. Simplify your life.
18. Do not time the market. It is time in the market that matters.
19. Start early, invest monthly via dollar cost or value-based averaging in a diversified portfolio.
20. Do not forget term life and health insurance for yourself and family.
21. Economically, your job is your greatest asset. Treasure it and invest in it.
22. Be quick to say sorry and take responsibility. Do not cover up. Be authentic. Always.
23. Engage your colleagues. Do not avoid your bosses, and do not forget the cleaners and receptionists.
24. When investigating a subject or solving a problem, look at different angles. Always turn the page. Never assume anything. Turn every goddamned page.
25. You are an actuary. You must do your work with care and competence. Understanding the problem is more important than getting to the answer.
26. Live your actuaries code – all the time. Be a credit to your profession.
27. Volunteer to do things for others; the community, the profession or the workplace. Be helpful, kind and generous.
28. Have a sense of humour.
29. Challenge the consensus and groupthink. Do it with respect and humility.
30. Read Frank Redington’s papers, in particular, The Flock and the Sheep. Read past presidential addresses. Also, Craig Turnbull’s History of Actuarial Thought. This will give you a flavour of our profession.
31. If your workplace is not right for you, leave. It is better to act early rather than late. You are more independent than you think.
32. Make notes. Carry notebooks with you. Be inspired by Leonardo da Vinci.
33. Stay curious – curiosity opens up windows and make you a more interesting person. Read Steve Jobs’s “Stay Hungry Stay Foolish” commencement address.
34. Invest time in Quadrant 2 activities. Things which are important but not yet urgent. Read Steven Covey’s “7 Habits of Effective People”. It is still one of the best books on personal development and leadership.
35. Learn new skills every year. Spend at least five hours a week on learning new skills. On social media, on languages, on programming languages, on new technologies. Stay current on data science and machine learning.
36. Read widely – at last one good book a month. Any book, which gets your attention. Of relevance to our profession are those on digital and biotechnologies, social platforms, new economics, culture, behavioural finance and genetics.
37. It is not only about knowledge. The real voyage of discovery is seeing things with new eyes. Question the paradigms you operate in. Read Gillian Tett’s ‘Silo Effect”.
38. Have mentors, coaches and guides. Be guided by the stars of the night and not the lights of each passing ship.
39. Jim Collins said, “Good is the enemy of great. It is just so easy to settle for a good life.” Do not settle for a good life. Settle for a great life.
40. Your partner in life. This is probably your most important decision. Use your head wisely. And your heart.
41. Take a long sabbatical. You can do this in-between jobs. Take a second degree, which is very different from your first, if you can.
42. Spend time with your family. Children, siblings and parents. This is precious.
43. Make your message compelling. Never give a speech unless you have something meaningful to say.
44. Read Lynda Gratton’s “The 100 – Year Life” and Herminia Ibarra’s “Working Identity”. These will help you in designing your increasingly long life.
45. Treasure your health. Have an exercise regime. Every day. Get a gym or yoga trainer, or any other trainer.
46. Sleep well. Sleep helps us improve our concentration and productivity. And enhances our immune system.
47. Always be engaged. This means listening and paying attention.
48. Always be engaging. This means speaking to the person and not at the person.
49. Understand culture. Culture is the game in town. The rest are sideshows.
50. The internet has democratised knowledge. Curate your own digital library. But be focused! Social media is part of life – use it.
51. Connect the dots across domains or paradigms. So read different types of books, talk to different groups of people and go to different places. Go to the heart of the problem by talking to people who really know the issues. Navigate the paradigms.
52. Care about is happening in our world. Make a difference. Remember Redington, who is probably the greatest actuary in the last 100 years, said, “An actuary who is only an actuary is not an actuary.”
53. Your spiritual and inner lives are paramount. Do yoga, prayer or meditation.
54. Do not lose force on distractions and irritations.
55. Your attention is your greatest resource. Use and direct your attention wisely. Understand narrow and wide attention. Read Marion Milner’s “A Life of One’s Own.” It is revelatory.
56. Most of us are mechanical and asleep most of the time. Wake up. Waking up means mindfulness and walking into a space of self-awareness.
57. We have a choice on how we want to respond to others and external events. Read Victor Frankl’s “Man’s Search for Meaning.” Only human beings can do this. Use this gift.
58. Keep a journal. Journaling refreshes our purpose.
59. Sir Francis Bacon said, “I hold every man a debtor to his profession; from the which as men, of course, do seek to receive countenance and profit, so ought they of duty to endeavour themselves by way of amends to be a help and ornament thereunto.” Be a help and ornament to your profession.
60. We live in a world of uncertainty. Use judgement, not models.
61. COVID-19 is unmasking the precarity of the world. Use your influence to help create a better world.