December 2010/January 2011 Volume 7 Issue 6

The Dementia
Epidemic

University Outreach
Program
Spreading The Word

Early Prisoner
Release
Optimizing The Results

The Fabric of ERM

Creating The Perfect Weave
Attest Today!
Attestation for the soa cpd requirement

is now open.
Here are the three easy steps:

1. Log on to the SOA membership directory

and click the SOA CPD Requirements button
on the main page.

2. Indicate whether you have met the SOA

CPD Requirement.

3. Identify which method of compliance

was used.

Attestation for 2009 – 2010 closes Feb. 28, 2011. You must attest
compliance with the SOA CPD Requirement or be considered non-compliant.
If you have questions, contact SOA customer service (customerservice@soa.org).
 ‘

The Actuary is published bi-monthly (February, Contributing Editors

April, June, August, October, December) by the Steven W. Easson, FSA, FCIA
Society of Actuaries, 475 N. Martingale Rd., Suite
steve.easson@rbc.com
600, Schaumburg, IL 60173-2226. Periodicals post-
age paid at Schaumburg, IL, and additional mailing
offices. USPS #022-627. Ronald Poon-Affat, FSA, FIA, MAAA
ronald.poon@tempopar.com.br
This publication is provided for informational
and educational purposes only. The Society of Susan M. Reitz, FSA, MAAA
Actuaries makes no representation or guarantee
smreitz@illinoismutual.com
with regard to its content, and disclaims any
responsibility or liability in connection with the
use or misuse of any information provided here- Max Rudolph, FSA, CERA, CFA, MAAA
in. This publication should not be construed as max.rudolph@
professional or financial advice. Statements of rudolphfinancialconsulting.com
fact and opinions expressed herein are those of
the individual authors and are not necessarily
Sudha Shenoy, FSA, CERA, MAAA
those of the Society of Actuaries or its officers,
directors, staff or representatives. The Society
sudha_shenoy@hotmail.com
of Actuaries does not endorse or make any
guarantee with regard to any products, services Tyree Wooldridge, FSA, MAAA
or procedures mentioned or advertised herein. ty.wooldridge@genworth.com

The Actuary is free to members of the Society of

SOA President
Actuaries. Nonmember subscriptions: students,
$22; North American $43; Int’l $64.50. Please send
Donald J. Segal, FSA, FCA, MAAA, EA
subscription requests to: Society of Actuaries, P.O. dsegal@soa.org
Box 95668, Chicago, IL 60694.
SOA Staff Contacts
The Actuary welcomes both solicited and unso- Patrick Gould
licited submissions. The editors reserve the right
Managing Director of Marketing
to accept, reject or request changes to solic-
ited and unsolicited submissions, as well as edit
& Communications
articles for length, basic syntax, grammar, spell- pgould@soa.org
ing and punctuation. The Actuary is copyedited
according to Associated Press (AP) style. Lisamarie Lukas
Director of Communications
For more information about submitting an arti-
llukas@soa.org
cle, please contact Sam Phillips, associate editor,
at (847) 706-3521, sphillips@soa.org or Society
of Actuaries, 475 N. Martingale Rd., Suite 600, Karen Perry
Schaumburg, IL 60173-2226. Publications Manager
kperry@soa.org
©
2010 Society of Actuaries. All rights reserved.
No part of this publication may be reproduced in
Jacque Kirkwood
any form without the express written permission
of the Society of Actuaries. Senior Communications Associate
jkirkwood@soa.org 10
POSTMASTER: Send address changes
to the SOA, c/o Communications Sam Phillips
Department, 475 N. Martingale Rd., Suite
Magazine Staff Editor
600, Schaumburg, IL 60173-2226.
sphillips@soa.org

XX% Erin Pierce

Cert no. XXX-XXX-XXXX Graphic Designer
epierce@soa.org

December 2010/January 2011

issue of The Actuary
 ‘

20
Cover Story
20 The Dementia Epidemic:
Are We Ready?
Will this growing epidemic
affect the work you do? The
health care industry? What will
be the impact on long-term
care? On life insurance? 16
By Karen Henderson

Features Departments
10 Spread the Word 6 Farewell to contributing
The SOA’s University Outreach
editors
Program continues to evolve.
8 Letter From The
Read how the program is connect-
ing with the next generation. President
By Lisamarie Lukas 32 Education
36 The SOA at Work
16 The Fabric of ERM
A description of the four main
ERM approaches.
By Alice Underwood and Dave Ingram

24 Right Man Walking?

Optimizing Early Prisoner
Release
This article is adapted from the
first-place winning essay of the
Entrepreneurial Actuaries Sec-
tion’s essay contest. The essay
was declared the winner for
its innovative use of predictive 24
modeling/business analytics.
By Nickolas J. Ortner
 Editorial

A Fond
Farewell

Sue Reitz Sudha Shenoy Max Rudolph Narayan Shankar

Ronald Poon-Affat Steve Easson Ty Wooldridge

By Sam Phillips

The contributing editors for this magazine do a lot of work behind the scenes. They each keep a watchful eye on their area
of expertise and make sure the readers of The Actuary stay informed on the important developments in those areas. They also make
decisions about the appropriateness (too technical, too basic, etc.) of unsolicited articles. Their role is integral to the success of The
Actuary. We would not be able to provide you with the high-quality content that packs each issue of The Actuary without the help of
the contributing editors.

This is the last issue for the current contributing editors as the new year will bring with it a new set of contributing editors. But it is with
much heartfelt thanks that I say, Sue, Sudha, Max, Narayan, Ronald, Steve, and Ty, all your efforts, both individually and as a group,
have been greatly appreciated. You have done a wonderful job!

Take care and good luck in the future.

Sincerely,
Sam Phillips, The Actuary staff editor A

06 | The Actuary | December 2010/January 2011

 Feb. 27 – March 2, 2011, Four Seasons Hotel, Las Vegas, NV
A Global Gathering for Senior Life Insurance and Reinsurance Executives

Feb. 27 – March 2, 2011

Four Seasons Hotel
Las Vegas, NV

Get full details at www.ReFocusconference.com.

Sponsored by:
 Letter From The President

WHY ATTESTATION
IS IMPORTANT
By Donald J. Segal

Thanks to the many members and the SOA CPD Requirement. Attestation, and arial services that SOA members meet continu-
friends who have welcomed me to my the public disclosure of compliance with the ing education standards, and they can provide
new role as the 62nd president of the Society Requirement, was implemented to generate the up-to-date, reliable expertise that various
of Actuaries (SOA). It was a pleasure to see trust among those who rely on our services. individual clients require.
old friends and meet new faces at the 2010 If we are to preserve the market value of the
Annual Meeting in October. SOA credential, then we must ensure public The current attestation period opened on
trust in our credential. November 1 and closes on Feb. 28, 2011.
I’m very excited about the possibilities that To those of you who have already attested,
we will face in the coming months as–– I was a member of the volunteer committee thank you for doing so. To those of you who
together––we seek to strengthen the profes- that designed the SOA CPD Requirement. We haven’t, there’s still plenty of time to take
sion and the numerous services that we had long conversations with the Board on care of this very important matter.
provide. I look forward to working with you, what our responsibility was to the public with
listening to you and, most of all, achieving regards to the CPD Requirement. We conclud- Contrary to what some of you may think,
with you. ed that the public attestation of compliance attestation is quick, easy and necessary.
with the SOA CPD Requirement enhances the If you know your compliance path, have
Significant Steps profession’s reputation for being trustworthy, tracked your CPD credits and are sure the
My commitment is to continue the significant and it showcases our high ethical and techni- SOA has your e-mail address, then you’re
steps in our strategic plan to ensure that cal standards. If employers, clients or potential ready to attest. To complete the process,
the SOA and its members remain leaders in clients have a question or reservation about there are three simple steps: (1) log on to
the actuarial profession. As a reader of this a member’s skills, they no longer have to rely the SOA membership directory and click the
magazine, you’ve likely seen that for the past solely on our reputation that SOA members SOA CPD Requirements button on the main
few years each issue features a “President’s meet existing standards. Now, interested parties page; (2) indicate whether you have met
Column” that typically covers the work we’re can go to the membership directory, where a the SOA CPD Requirement; and (3) identify
doing together to achieve our goals. member’s compliance status will be revealed. which method of compliance was used. If
With a formal attestation process and public there are questions, contact SOA customer
One important item happening this year is disclosure, we are assuring peers, colleagues, service (customerservice@soa.org).
the launch of the attestation compliance with employers, the public and other users of actu-

08 | The Actuary | December 2010/January 2011

Transparency Further, any member who is not compliant is My passion for continuing
As I stated earlier, it’s not just important that required to notify anyone who relies on his/her education is well known,
members attest to the SOA. It’s important that actuarial services that he/she has not complied and I hope you’ll share
those people who use or might use your servic- with the SOA CPD Requirement. This could with me the promise of
es are aware that you met or did not meet the include your employer. new horizons to be gained
SOA CPD Requirement. Members who attest through lifelong learning Donald J. Segal

compliance will be shown in the directory as Although I don’t anticipate such a situation and a passionate commit-
“Compliant.” Those members who don’t attest developing, members should be reminded ment to our profession. A
will be listed in the member directory as “Non- that anyone who falsely asserts compliance
compliant” (unless you are eligible for reduced with the SOA CPD Requirement is subject to Donald J. Segal, FSA, FCA, MAAA, EA, is president of the

disciplinary action under the actuarial Code of Society of Actuaries. He can be contacted at dsegal@soa.org.
dues on account of retirement, in which case
your status will be indicated as “Retired”). Professional Conduct.

December 2010/January 2011 | The Actuary | 09

By Lisamarie Lukas

The SOA’s University Outreach Program continues to evolve.

Read how the program is connecting with the next generation.

A
s children, many of us prob- When did you decide that you wanted to nor or two) and that starts them down their
ably dreamed of becoming police be an actuary? Maybe you were lucky and eventual career paths.
officers, doctors, or even the presi- you found your love of math when you were
dent of the United States. And then, our skills young and had someone in your life who Armed with this knowledge, the Society of
developed and we learned what we really introduced you to the actuarial profession. Actuaries has actively been engaging with
loved to do—prompting us to take another But, we know that for many, decisions about students on college campuses across North
look at what we actually wanted to be when future careers are usually made in college— America. Our visits, which are conducted
we “grew up.” students choose a major (and maybe a mi- on behalf of the profession, are a great way

December 2010/January 2011 | The Actuary | 11

 What a few of our
featured actuaries have to say
Simeon Ling, consultant, Tow- taking the same exam at a sub- the SOA as more than just an Q: Having met with students,
ers Watson; John Horvath, sequent date. It is great to see fu- administrator of difficult exams! what do you think about the
director, UnitedHealth Group; ture actuaries seeing themselves Also, providing the students future of the profession?
Steve Vernon, president, Rest- as on the same team, rather than with an official roadmap of the
of-Life Communications; and competing opponents. exam process is helpful for the A: JH: The branding campaign
Sunit Patel, senior vice presi- students who only hear about has clearly paid off. It was amaz-
dent, Fidelity Investments, com- JH: The diversity. It was great to
mented on the benefits of the see that the actuarial profession-
The students I met have energy, am-
University Outreach Program. al has piqued students’ interest
bition and willingness to try new
with a variety of backgrounds.
Q: How did you get involved
things—always a good combination
in the program? Q: What do you think is for the profession. – Steve Vernon
the biggest benefit of the
A: SP: The SOA was going to program? it through the rumor mill or ing to see so many students in-
my alma matter and I thought through online forums. terested in the profession. The
it would be a great way to give A: SV: Students were able to profession will see a great deal
back to both my school and the talk with actuaries to hear what Q: What’s the one piece of of up-and-coming talent over the
SOA, both of which were very a “day in the life” is like, and to advice you always share with next few years.
important to my career. get career planning advice. students?
SL: I am looking forward to col-
Q: What about the students SP: It gives students a chance to A: SV: Ask as many questions laborating and working with
you’ve met has most sur- find out first-hand what it is like as you can—become an informed these aspiring actuaries as they
prised you? to work as an actuary and it gives “consumer” of your career. enter the profession and bring
the SOA an opportunity to dispel their strong work ethic, techno-
A: SL: The members of the ac- some of the stereotypes that still SP: Be as well rounded as pos- logical know-how and energy to
tuarial club have strong camara- exist about the profession sible. As you go through differ- the profession.
derie and aid one another in the ent experiences, you’ll figure
exam process. Last year, one of SL: Helping the students obtain out better where your greatest SV: The students I met have en-
the candidates that had passed a clear understanding of the interests are and it will be easier ergy, ambition and willingness to
an exam hosted a mini-seminar SOA and its overall purposes to pursue them if you are well- try new things—always a good
to help other students who were and outlook. Students can see grounded in various disciplines. combination for the profession. A

to connect with students. Since the program who graciously gives his or her time to help recommend that a friend attend a similar ses-
started in 2007, we’ve met with more than students understand what it’s really like to be sion. And, the word must be getting out, as
1,300 students, talking with them about the a member of the actuarial profession. each year the number of requests we receive
profession and its opportunities—and dispel- from schools wanting us to visit far exceeds
ling some commonly held myths about the The results speak for themselves—in a post- the number of visits we’re able to make.
education system and exam process along event survey sent to each participant, we
the way. Staff from the SOA’s education and consistently hear that students appreciated To meet this increasing demand, we con-
marketing/communications teams host the our visit, feel more informed about the ed- tinue to take our “show on the road.” This
visits, joined by a practicing actuary (or two) ucation and exam system and are likely to year we visited campuses from California to

12 | The Actuary | December 2010/January 2011

 What students
we have met have to say
Joseph P. Feinberg, University does on a task level. Although my to the mitigation of risk through- were able to name about 20 com-
of California at Santa Barbara, schooling prepared me for some of out the financial industry. It will be panies, and seemed as though
class of 2010, is now an actuarial the actuarial exams, we did not yet fascinating to see how the actuarial they would have done another 50
analyst for WellPoint, Inc.; Sarah have any classes that were geared profession evolves as risk manage- had they not had other important
Schachet, senior at Wharton, toward teaching actuarial work. ment increases in importance. things to discuss.
secretary of the Penn Actuarial
Society; and Matthew Berg, SS: I wanted to attend the presen- Q: Did the presentation dispel SS: I was impressed by the pre-
senior at Wharton, treasurer of tation to find out more about the any myths? senters’ thorough explanation of
the Penn Actuarial Society, took professional organization that is re- the rationale for the components
a lot of interesting information sponsible for the exam process and A: SS: The presentation did an ex- of the ASA and FSA credentials,
away with them. They share for maintaining the credibility and cellent job dispelling the idea that particularly about the modules and
their thoughts here. integrity of the FSA designation. actuaries are number-crunching the DMAC. It’s reassuring to know
automatons. Instead, the present- that the SOA makes improvements
Q: What made you attend the Q: What was the most helpful ers emphasized that actuaries are a to the exam process based on the
presentation? insight offered? group of powerful contributors and evolving skills necessary for profes-
leaders in their workplaces because sional success as an actuary.
A: JF: I decided to attend the pre- A: SS: The greatest insight of- of a depth and breadth of knowl-
sentation because I was interested fered during the presentation was edge coupled with strong business MB: The real-world experience
in a new perspective of the actu- about the resilience of the actu- acumen. given by the featured actuary was
arial field. So far in the actuarial arial profession during lean eco- somewhat surprising in that he was
club we had had presentations from nomic times such as the recent re- Q: Was there any advice or in- able to easily move from pension
the companies telling us why their cession. In times such as these, it formation that surprised you? work, to actuarial consulting, and
company would be the best to work is exciting and fitting to be study- then to investment management.
for, and we had presentations from ing in a field that helps identify, A: JF: I think the number of
senior level actuaries (retired or quantify and mitigate the financial companies hiring actuaries was Q: Are you still interested in
otherwise) who would tell us what impact of risks taken in the busi- the most shocking piece of in- the profession?
kind of challenges the actuarial ness world. formation I learned from the pre-
firms and companies encounter on sentation. There was a moment A: SS: I am still very much inter-
a large scale. What I had not yet MB: One of the most interesting in- when the speakers listed several ested in the profession and excited
heard, and was interested in hearing sights was that this is a profession companies in each of the actuari- about the opportunities available to
from the SOA, was what an actuary that, now more than ever, is critical al fields. Without hesitation, they actuaries. A

New York City and we’ve also started build- Just as we do during our in-person visits, this math-oriented college students to pursue their
ing a “virtual” visit program to increase the video will highlight opportunities for actuaries, actuarial credentials.
resources available to students online. share information about the exam and educa-
tion pathways and offer students the chance But, the filmed visit won’t be the only new
How are we doing that? Over the course of two to hear directly from practicing actuaries. It’s material added to the website. We know
days of filming, we’ve captured the contents of an exciting growth of the University Outreach the way students demand content has
a typical visit, which will be used to create a program that will enable us to introduce even evolved—and so we’re evolving the website
University Outreach video that will be available more students to the actuarial profession—and to meet these changing expectations. First,
for download on www.riskisopportunity.net. hopefully encourage academically talented, we plan to soon launch an “Opportunity TV”

December 2010/January 2011 | The Actuary | 13

 practice areas and locations, talking about
what a day in their life is really like. Stu-
dents love this perspective, as it helps them
understand what it’s like to be an actuary
in a way that taking exams can’t. The par-
ticipants will share their stories using either
a “faux” Twitter account or Outlook calen-
dar—and eventually maybe by recording
short videos, too.

And finally, we’ll help students learn even

more about the SOA University Outreach staff
by posting short biographies of the team that
attends visits or is featured in the video. It is
important to us that students understand the
SOA team is approachable and excited about
opportunities to talk directly with students
and candidates.

Curious? Stay tuned to riskisopportunity.net dur-

ing the coming weeks to learn more and see
section of the website, bringing videos like On the note of connecting students to
first-hand the new content we’ve developed!
Actuaries in Action and others onto this practicing actuaries, we know that’s some-
And of course, we’d love for you to get involved
site so that students have an opportunity thing they most value about our program.
in helping us to build our University Outreach
to watch them (See illustration above). So in the coming weeks, we’re launching a
program. If you know a school that might ben-
This content will be a great complement new series called “Day In The Life Of” on
efit from a visit, let them know about our pro-
to the filmed visit, allowing students to riskisopportunity.net.
gram and encourage them to reach out to us.
hear directly from even more actuaries And, if you’re willing to be a featured actuary
and enabling us to share existing content This series will feature actuaries at vari-
or to share a day in your life with students, we’d
in a new way. ous stages of their careers, from different
love to hear from you! Finally, if you’ve done
anything to connect with university students,
it’d be great to hear from you—maybe you’ll
Students are listening have the next idea for ways we can continue to
build this program. A
Our University Outreach pro- to provide an array of insights and
gram continues to grow and has perspectives. So, we’re asking—
Lisamarie Lukas, is director of Communications for the
proven to be a valuable way for what advice do you have? What’s Society of Actuaries. She can be contacted at llukas@
us to connect with future mem- one thing you think we need to soa.org.
bers of the profession. What make sure to tell students as we
we’ve learned is that students travel around the country?
really appreciate the opportunity
to talk with practicing actuaries. Share your thoughts! Join the
conversation at blog.soa.org.
Hearing from one or two actuaries
is great, but we want to be able

14 | The Actuary | December 2010/January 2011

Jan. 5–7, 2011 | Orlando, FL

World-Renowned Experts Share

New Scientific Findings
Join distinguished speakers from around the world as they gather to
share new ideas and knowledge on aging, changes in survival rates
and their impact on society.

Supported by a host of international organizations, the Living

to 100 Symposium offers two and a half days of groundbreaking
presentations, as well as professional development and networking
opportunities.

Whether you’re an actuary, gerontologist, demographer, physician,

economist, scientist, academic or other professional, attend the
Living to 100 Symposium to participate in the many thought-
provoking discussions on:

• how and why we age;

• measuring current mortality and projecting future rates of
improvement in survival;
• identifying potential advantages and risks associated with the
increasing number of retirees; and
• suggesting solutions to difficult issues resulting from individuals
living longer. Contact Denise Fuesz at dfuesz@soa.
org to become a sponsor. Contact Jan
Don’t miss your chance to take part in this stimulating, interactive,
multidisciplinary learning experience. Schuh at jschuh@soa.org to become a
participating organization.
Register today at http://livingto100.soa.org—
and view our complete listing of participating
organizations. Sign up by Dec. 8 to save.
By Alice Underwood and Dave Ingram
For a company to get the most out of ERM, it needs to find the
right weave of the four ERM perspectives to best suit itself.

I f Enterprise Risk Management that suits them best; there’s no need to be insurance companies send a fraction of their
(ERM) is what it claims to be, then it is constrained to the off-the-rack plaids and biggest risks off to a reinsurer, they are moti-
at its core the discipline of managing stripes that are the standard offerings. vated by the desire to maximize the benefits
risk across an entire enterprise. But there are of diversification.
many different types of enterprises, from the Diversification
pin-striped financial world to the tough, blue Many ERM practitioners see diversification A very few insurance firms explicitly apply
denim collars of manufacturing. as the non-strategy strategy. Those who fol- diversification at the strategic level, as a
low a diversification approach may appear major theme of their ERM process. Modern
Banks believe they invented ERM, as the an- simply to be rejecting organized ERM. But conglomerates, on the other hand, have el-
tidote to their out-of-control trading desks. diversification is part of the risk management evated this approach to become their driv-
Insurers see risk management as their birth- strategy of many—perhaps most—firms, and ing principle.
right—but the underwriters and actuaries it can absolutely be applied in an enterprise-
whose uneasy truce defines the sector have wide fashion. Loss Controlling
very different ideas of what risk management Loss Controlling is a fundamental risk man-
means. Long-lived firms in other business sec- When concentrations of risk are monitored agement activity that seeks to restrict expo-
tors are comfortable that their own approach at an enterprise-wide level, this is Diversifica- sure to potential losses or risks. Almost all
to risk is all that is needed. Basel II/III, Solvency tion-based ERM. To moderate its risk profile, businesses do this to some degree; the inter-
II and COSO/ISO31000 are the fundamentally the firm seeks to undertake a broad range nal audit function and other ways of control-
inconsistent roadmaps to these divergent ap- of activities whose risks are unrelated, and ling operational risks typically fit this category.
proaches. And to the enduring consternation to maintain an appropriate balance among
of disciples of each of these styles of ERM, a these activities. The key limit applied is a In banks and insurance companies, the
number of firms flaunt the dictates of all three, concentration limit. The best practitioners of major Loss Controlling activities include
yet continue to survive and sometimes thrive. this approach constantly monitor their risks, risk underwriting and the establishment
staying alert for any change that would mark- of exposure limits. Exposure limits for
From this tangle, we can identify four dis- edly increase the risk of one of their ventures nonunderwriting risks, such as interest
tinct approaches to the management of en- and thereby skew the spread of risk. rate and equity exposures, can be en-
terprise-wide risk. These four ERM strategies forced by using asset-liability matching
can be called Diversification, Loss Control- The popular investment strategy of periodic and hedging. In nonfinancial firms, Loss
ling, Risk Trading and Risk Steering. We will rebalancing is at its core a diversification Controlling adds a physical dimension.
consider each of these in turn, demonstrat- strategy. Buying and selling the losers and This is addressed by safety and industrial
ing that each represents a complete manage- gainers is intended to keep the risk of the engineering programs—as well as by insur-
ment system, with its own sensible way to portfolio at a predetermined balance. ing physical property risks to set a limit on
accomplish different goals. potential exposure. Supply chain and raw
Diversification is also the fundamental idea materials risks are managed by a variety
Are each of these strategies really ERM? behind insurance. It is the principle that en- of techniques, including but not limited
Yes—in the sense that each can be used to ables insurers to assume risks from many in- to hedging. And in all types of firms, Loss
manage risk across an entire enterprise. That dividuals, whereas those individuals cannot Controlling strategies help to manage for-
proposition gives some practitioners pause. bear the risk alone. Following the law of large eign exchange and liquidity risks.
But recognizing that ERM is a fabric woven numbers, diversification is best achieved
from four different threads can help every with a very large pool of independent risks Traditionally, each of these risks was man-
firm to weave them together in the manner of similar size and risk characteristics. When aged in isolation. But Loss Controlling be-

December 2010/January 2011 | The Actuary | 17

 comes an enterprise-wide approach when (the ratio of claims plus expenses to premi- Steering ERM. At a macro level, information
all the firm’s risks are measured on some ums). Health insurers often have the same obtained from ERM systems can be used to
comparable basis. Then management can Risk Trading focus. They consider premium optimize the company’s risk portfolio. Pro-
decide whether to retain or reduce expo- inadequacy their main risk—and, in fact, posals to grow or shrink parts of the business,
sure to certain risks based on a view of the many firms in these sectors have failed to and opportunities to offset or transfer differ-
firm as a whole. maintain adequate premium levels over a ent portions of the total risk position, can be
period of years. viewed in terms of risk-adjusted return. Some
The development, maintenance and inter- firms employ this approach only for major ad
pretation of comprehensive risk models When these firms shift to an enterprise focus hoc decisions on acquisitions or divestitures;
that can be used to evaluate all risks on the for their risk management programs, they others use it all of the time.
same basis are relatively new phenomena. start to think about using economic capital
Often, when such a model is first deployed, and a cost-of-capital approach to standard- This top-down risk management process
typically uses an economic capital model

A stronger ERM fabric—woven from all as its key reference point for risk, and the
key limit applied is the amount of economic
four strategic strands—should help capital any one activity is allowed to con-
sume. The planning cycle then will include
firms avoid embarrassing exposures in a capital budgeting process that incorpo-
the future. rates the capital requirements and expected
return on capital associated with planned
and management sees the company’s ac- ize their pricing risk margins. These firms future business. Consideration of a business
tual risk profile, they realize that some risks may also establish risk limits that relate to the plan is evaluated as a potential allocation
are managed very tightly while others are amount prices may deviate from the “stan- of capital to support that business activity,
essentially ignored. In the context of a Loss dard” by-the-book rates. and financial results are measured on a risk-
Controlling approach to ERM, risk models adjusted basis. This includes recognition of
are most often used to conduct stress tests Life insurers often use a Risk Trading ERM the economic capital necessary to support
that help prepare the firm for the worst- strategy if universal life or deferred fixed an- business risks—as well as the risk premium,
case situation. nuity products comprise a significant portion loss reserves, and duration issues for multi-
of their portfolio. For such products, there period risks such as credit risk or casualty
Risk Trading is a target interest rate margin and a regular insurance. A few firms that are using a Risk
Modern ERM can be traced to the trading discretionary process for setting the interest Steering ERM process have also created an
businesses of banks. Hard lessons from un- rates that are credited to their customers. incentive system tied to the risk-adjusted fi-
controlled trading led to the development of These firms sought a comprehensive ap- nancial results.
improved management processes and stan- proach for managing interest rate risk when
dards. A major element in these systems is they began to vary the required margin be- Taken together, these activities can be seen
the valuation—in other words, pricing—of tween investments and liabilities based on as broadly similar to strategic asset alloca-
risks. Management of risk through Risk Trad- the credit quality of the investments. tion processes that allocate investments
ing activity can be applied on a transaction- among classes to achieve the optimal re-
by-transaction basis. But applying a consis- Risk Steering turn for choices along the efficient frontier.
tent view of risk pricing across all risks leads The activities most commonly described as In fact, some insurers that use Risk Steering
to a Risk Trading form of ERM. ERM today are those that incorporate risk do employ the efficient frontier concept and
considerations into a comprehensive pro- plot their businesses on a risk versus reward
Many property and casualty insurance and cess for firm-wide risk capital budgeting and graph using economic capital instead of
reinsurance companies are pure Risk Trad- strategic resource allocation, with an eye standard deviation as the risk axis.
ing firms. They focus on their combined ratio to enhancing firm value. We call this Risk

18 | The Actuary | December 2010/January 2011

Hybrid Approaches pabilities of all four approaches. Each strat- likely emerging environment. (This is the
Firms that try to follow only one of these egy may come to the fore for a particular type process called Rational Adaptability in “The
approaches to risk management will find of risk or a particular market environment. Full Spectrum of Risk Attitude” in the Au-
their system lacking at one time or another. gust/September 2010 issue of The Actuary.)
Banks found that their risk trading systems For example, until someone develops a mar-
failed to prepare them for adverse situations ket for operational risks, those risks will be In the immediate aftermath of the 2008 finan-
that occurred much more frequently than best managed using a loss controlling ap- cial crisis, some felt that the emperors of ERM
their models had suggested, so they began proach—leaving the price-focused trading had no clothes. We suggest instead that their
to augment with some stress tests out of the approach to risks that are actually traded, ERM garments were not constructed from
loss controlling sphere. But without an un- and applying model-centric steering to risks the best cloth. A stronger ERM fabric—wo-
derstanding of the differences in perspective that the firm can actually choose not to take. ven from all four strategic strands—should
underlying these divergent risk management help firms avoid embarrassing exposures in
systems, many managers felt as though they At the strategic decision-making level, a view the future. A
had been asked to put socks on a fish. of the current risk environment may influ-
ence which of the four approaches takes Alice Underwood, Ph.D., FCAS, is an executive vice

Gaining an understanding of each of these center stage (see “The Many Stages of Risk” president with Willis Re Inc. and leads the Actuarial Services
team for Willis Re North America. She can be contacted at
risk management systems—and recognizing in the December ‘09/January ’10 issue of
alice.underwood@willis.com.
that each can be applied on an enterprise- The Actuary). This four-fold approach can be
wide level—offers practitioners better per- thought of in terms of a four-page risk dash-
David Ingram, FSA, CERA, FRM, PRM, is senior vice
spective on how the different strands can be board, with one page for each of the four president for Willis Re Inc. He can be contacted at dave.
woven together. approaches to ERM. In this context, a major ingram@willis.com.
responsibility of the chief risk officer is to se-
Using All Four Systems lect the best order for these four pages at any
The strongest ERM systems leverage the ca- point in time, based on the current and most

December 2010/January 2011 | The Actuary | 19

20 | The Actuary | December 2010/January 2011
 This article is a compilation of articles that ran in the May 2010 issue of Long-Term Care News, and
stresses the seriousness of taking action now before this crisis swells to epidemic proportions.

The Dementia
Epidemic
Are We Ready?
By Karen Henderson

Alzheimer’s disease, the most common

form of dementia among older adults, is
a progressive, fatal brain disease.

A
lzheimer’s disease was first diagnosed by Dr. Alois Alzheimer in 1906 in Frankfurt,
Germany. The symptoms of Alzheimer’s—memory loss, cognitive and language deficits, auditory
hallucinations, delusions, paranoia and aggressive behavior—were usually referred to as “senile
dementia” and generally considered a normal part of aging.

We now know better—unfortunately. As scientists began to realize that Alzheimer’s was a disease characterized
by plaques and tangles in the brain, the Alzheimer Society of Canada—the first organization of its kind in the
world—was founded by Madeleine Honeyman in 1978. Madeleine cared for her husband who suffered from de-
mentia and when she asked for help or guidance, she was
abandoned by the medical industry who told her that her
husband would be dead in three years and to think only Additional Stats
about herself. She is now 98 and has not stopped advocat- If dementia care were a country, it would be the world’s 18th largest economy. If it were
a company, it would be the world’s largest by annual revenue exceeding Wal-Mart
ing for those who suffer from this terrible affliction. (US$414 billion) and Exxon Mobil (US$311 billion). The World Alzheimer Report 2010

Alzheimer’s Disease has no known cause and no cure; Canada US The world

the medications available may slow the progression of the Number of people suffering from 500,000 5.3 million 35.6 million
dementia now
disease in some but will not stop it.
In approximately 20 years 1,125,200 7.7 million 65.7 million

Stats sources: Canada: Alzheimer Society of Canada; United States: Alzheimer

In January 2010, the Alzheimer Society of Canada released Association; World: Alzheimer Disease International.

an alarming report titled, “Rising Tide: The Impact of De-

mentia on Canadian Society.” In the report the Society

CONTINUED ON PAGE 23

December 2010/January 2011 | The Actuary | 21

 What About The Caregivers?
By Karen Henderson

The Heart of Home Care.” It showed that one in six people

caring for ailing seniors at home is in distress. The number
shoots up to one in three if the senior has cognitive problems
such as Alzheimer’s Disease; one in two if the senior is ag-
gressive or abusive.

Nearly 40 percent of family members caring for a loved one with

dementia suffer from such signs of distress as depression, rage
and an inability to cope.

A
And what if a person suffering from dementia can no longer
s our population rapidly ages, more of us are stay at home because the caregiver is burned out or the de-
being called upon to become caregivers. In our so- mentia sufferer has become violent or dangerous? The Rising
ciety this is a thankless job; caregivers receive no Tide report stated that although the number of long-term care
formal training, too little community support and of beds in nursing homes is forecasted to grow from approximate-
course no financial compensation for taking time off work or in- ly 280,000 beds in 2008 to 690,000 in 2038—10 times the cur-
deed, quitting entirely, which too often happens when the care rent demand—there will be a projected shortfall of more than
receiver has dementia and needs 24/7 care and supervision. 157,000 beds. Families are waiting months, even years now for a
long-term care bed; how will they survive in the future?
Caregivers are primarily spouses, which is not ideal because
they, too, are usually coping with age-related issues. Typically Once again, there is no national strategy to support caregivers,
the second most common caregivers are the daughters of the although this has been “discussed” for years.
patient, who must often juggle the demands of caregiving with
the demands of a career, children and otherwise busy lives. Caregiving until the end of life leaves few untouched. In most
cases the death of a loved one allows caregivers to heal and
Unfortunately caregivers take on the burden with little complaint. move forward, wiser in the knowledge that the circle of life con-
This accepting attitude has allowed governments to ignore their tinues as it always has. Dementia, however, imposes its own set
plight and happily accept the $25 billion1 a year in unpaid labor, of unique sorrows upon caregivers because when the dementia
often allowing the caregivers to destroy themselves physically, journey is supposed to be over, it’s not over. After this unspeak-
emotionally, socially, and financially while doing the right thing able injustice has robbed us, daughters and sons, of those we
by their loved ones. love, after we are finally able to shake off the shock, the fatigue
and the disbelief over what we have managed to live through,
The burden is huge. In 2008, 231 million hours of care were spent in what remains is the dark terror that we will follow in our par-
Canada by the families of people suffering from Alzheimer’s. The Ris-
ents’ genetic footsteps. A
ing Tide study anticipates that this will be 750 million hours in 2038.

FOOTNOTE:
The Canadian Institute for Health Information (CIHI) issued a 1
M. J. Hollander, et al., “Who Cares and How Much?” Health Care Quarterly 12, 2
report in late August called, “Supporting Informal Caregivers: (2009): pp. 42–49.

22 | The Actuary | December 2010/January 2011

warned that the number of Canadians liv- Dementia Is Striking A Growing ily caregivers play; provide them with
ing with Alzheimer’s Disease or dementia is Number Of Boomers information, education and financial
expected to swell to epidemic proportions The report also stated that of the half-mil- support
within a generation. About half a million lion Canadians affected by various forms 3. Recognize the importance of preven-
Canadians are now affected; the Society of dementia, about 71,000, or almost 15 tion and early intervention
predicts that within 25 years, the number of percent, are under 65. Of those, 50,000 are 4. Place greater emphasis on care
cases of Alzheimer’s or a related dementia 59 or younger. integration
will more than double, ranging between 5. Strengthen Canada’s dementia work-
one million and 1.3 million people. It is “We know that we’re finding far more indi- force
seen in all cultures, but affects more wom- viduals in their 50s and 60s who have demen-
en. Women account for 72 percent of Cana- tia,” said Society CEO Scott Dudgeon. “We’re Who Is Sounding The Call?
dians with Alzheimer’s Disease. talking about dementia generally, including We read the papers. We watch the news. We
Alzheimer’s Disease.” know there is a problem. But who is taking ac-
Economic Burden tion? The dementia crisis is not a priority for
The current cost to Canadians for demen- What Should We Be Doing To the Canadian government. Individuals and
tia care is $15 billion; over the next 30 Prepare? families are reluctant to take the time to plan
years dementia is expected to cost society At this time Canada does not have a national for aging and long-term care planning. The
over $872 billion in direct health costs, un- strategy to cope with the oncoming crisis. majority of professionals who advise aging
paid caregiver opportunity costs and indi- Only a handful of governments have national citizens—financial, legal, accounting—are
rect costs associated with the provision of dementia or Alzheimer’s policy strategies— uneducated about aging and dementia and
unpaid care. France, England and Australia do, but the resist stepping up and discussing the issues.
United States and many developing nations
“These new data only reinforce the fact do not. So it is up to individuals to respond and react. Be-
that Alzheimer’s Disease and related de- come aware and become educated. Recognize
mentias are a rising concern in this coun- The Canadian report recommends the following: the need for long-term care planning now! A
try, an epidemic that has the potential
to overwhelm the Canadian health care 1. A ccelerate investment in all areas of Karen Henderson, educator, speaker, writer, consul-
system,” Ray Congdon of the Alzheimer dementia research tant, publisher, author and founder/CEO of Long Term

!
Society said in a statement. 2. Recognize the critical role that fam- Care Planning Network, can be contacted at karenh@
ltcplanningnetwork.com or www.ltcplanningnetwork.com.

Let’s Start a Conversation!

The information presented here focuses on the Canadian As actuaries, what is your perspective about this growing
perspective of Alzheimer’s Disease, the most common epidemic? How will it affect the work you do? How will it
form of dementia among older adults. affect the health care industry? What will be the impact
on long-term care? On life insurance?
There has been much written about this brain disease. We
know it’s progressive and fatal. We know that today there Please share your views with us. Your feedback is impor-
is no cure. We also know it’s not just a disease that affects tant and may be included in an upcoming issue of The
the elderly. It can strike people in their 40s and 50s. Actuary. Send an e-mail to theactuary@soa.org.

Armed with that knowledge, it’s important to know We welcome your comments. Let’s start a conversation!
what’s being done, not just in our own backyards, but
throughout the world as well. In short, what are we doing
to prepare for this oncoming crisis?

December 2010/January 2011 | The Actuary | 23

 Right Man
Walking? Optimizing Early Prisoner Release
By Nickolas J. Ortner

24 | The Actuary | December 2010/January 2011

December 2010/January 2011 | The Actuary | 25
 This article is adapted from the first-place winning essay of
the Entrepreneurial Actuaries Section’s essay contest. The essay was
declared the winner for its innovative use of predictive modeling/
business analytics.

O
ver the last 20 years, the sec- grams face heightened scrutiny, resistance and opinions from a diverse array of sources—
ond fastest-growing state budget ex- ultimately elimination if executed arbitrarily would demonstrate the comprehensive risk
pense is managing prisons. Not only and inflexibly with outcomes that harm society assessment and mitigation process demand-
are 1 percent of American adults in prison, but or are otherwise unquantifiable. ed for the program’s absolute success by
those prisons are overcrowded (state prisons drawing the most complete picture of the can-
are above 100 percent of their designed ca- Early prisoner release programs can play a mean- didate under consideration for early release.
pacity) with accompanying annual spending ingful role in balancing budgets while helping
growth averaging 7 percent for decades.1, 2 At society—but only with a rigorous, merit-based Perhaps just as importantly, the following
the same time, tremendous spending pres- approach that the general public can confident- framework is intended to be a quantifiable,
sures face those same states, with 40-plus states ly expect to demonstrate favorable outcomes for living and breathing, and dynamic (rather
struggling to close shortfalls when adopting both itself and the released prisoner. than unchanging and static) template and
budgets for fiscal year (FY) 2011 while simi- tool. Ongoing reviews and oversight (with
larly projecting gaps for FY 2012 and shortfalls Overview quarterly overviews and annual rigorous as-
for FYs 2009 and 2010.3 An optimized process for evaluating and sessments of each line item and the underly-
quantifying the perils associated with freeing ing weighting scheme) will serve to optimize
With the current funding crunch, it’s assumed candidates eligible for early release would the applicability and efficacy of the evalua-
that average annual spending increases of 7 encompass an individualized assessment tion process.
percent for prisons are not sustainable. Simpli- and quantification of those risks that cap-
fied money-saving release criteria/programs tures the nuances of prisoners’ personalities. The framework is organized into four broad
incorporated by many states (recent examples Though simplified early release programs categories: the prisoners’ background/histo-
include Illinois, Nebraska and Wisconsin)—the currently in place treat all prisoners with the ry, support system, behavioral and skill devel-
early release of groups of prisoners convicted same history as equal, this optimized process opment and modification, and other profes-
under various definitions of “nonviolent” and recognizes the need for greater nuance. This sional evaluations. In unison, with a number
“minor” offenses—may ease the overcrowding program’s greater complexity is expected to of interrelated elements underlying those four
and dampen the budget strains, but such pro- result in minimized—and ultimately elimi- broader categories, this program is expected
nated—chances for recidivism, accompa- to better craft a more complete profile of the
FOOTNOTES: nied by maximized gains to both society and early release candidates than do current re-
1
Source: Motley Fool Stock Advisor (http:// the released prisoner. lease programs.
newsletters.fool.com) Volume 9 / Issue 3 / March-
2010 Report – Corrections Corporation of America
Proposed Evaluation The background/history and support system
2
Source: USA Today (www.usatoday.com) July
19, 2010 – “Job Squeeze is Felt Behind Bars” –
Framework/Scorecard components capture vital information re-
validation of #3 (current federal prison system At the heart of this optimized process is a lated to the prisoners’ criminal history, the
overcapacity) Statistic citation of federal prison
wide-ranging evaluation framework/score- voices and rights of the victims, and post-
system running 37% over capacity Author: Kevin
Johnson card relying on various expert ranks (experts release infrastructure and personal support
from a vast spectrum of fields to serve as the systems in place. The behavioral and skill
3
Source: Center on Budget & Policy Priorities
(www.cbpp.org) 7/15/2010 Report – “Recession foundational evaluative criteria and tool on development and modification, and other
Continues to Batter State Budgets, State Responses which this proposal is built). Such a score-
Could Slow Recovery” Authors: Elizabeth
professional evaluation pieces, rely even
McNichol, Phil Oliff, and Nicholas Johnson card—comprised of predictive elements and more heavily on expert assessments to more

26 | The Actuary | December 2010/January 2011

fully complete the understanding of the Candidates eligible for early release
evaluated prisoners. are to be graded against that scale
to not only establish who scores at
Expert ranks will categorize the chances of or above the (to be determined)
unfavorable or favorable outcomes upon minimum benchmark (“floor”) re-
early release. As an example, narrowly quired to activate early release, but
limited to “background/history” with the also to prioritize the timing of all
“criminal and imprisonment history ...” sub- candidates deemed eligible for
category described more fully below, a pris- early release as a result of their
oner with no prior criminal history or impris- scoring above the underlying
onment would be expected to score higher, benchmark floor. Those failing
indicating a favorable background related to to achieve the cumulative to-
success upon release, whereas an individual be-established minimum score
with a multiple repeat offense and imprison- would not be eligible for early
ment history would be expected to score release, but could be reas-
much lower. sessed at a future time (though
turnaround time on a reas-
The quantifiable and expert-reliant nature sessment should be sufficient
of the elements of the framework demands to ensure the evaluated prisoner
the normalization for evaluator tendencies demonstrates sufficient progress in
within the tool, with evaluators’ rating bias- areas where progress is needed). Those
es (i.e., certain evaluators may be expected landing above the benchmark floor but
experts’ ranks taking into
to be lower or higher graders or to have cer- scoring the minimum within a particular
account the violence, crim-
tain other tendencies) substantiated and a subcategory would require reassess-
inal behavior pattern (in-
normalizing adjustment incorporated into ment prior to release—to be confi-
cluding whether any crimes
the scoring process to ensure equitable dent that the minimum score in a
were premeditated and/or
treatment of all evaluated prisoners. specific category is a risk that the
repeated), and probabil-
program is willing to shoulder.
ity of recidivism associated
The initial framework assigns equal weight to
with the cumulative prior
each of the established criteria. That said, an Background/History
criminal history.
important element for the ongoing success Kicking off the prisoners’ evaluation, the
of this program is periodic, continuous and nature of the crime that led to the current
Victims’ voices must also be
rigorous reviews of this framework to either imprisonment must be a primary consider-
heard, giving weight to victims’ and vic-
confirm the enduring applicability and effi- ation, with experts’ ranks considering the
tims’ families’ receptivity to release and
cacy of the underlying weighting scheme, or violence, criminal behavior pattern (in-
sufficient consideration to the number of
catalyze revisions to the current scheme. cluding whether any crimes were premedi-
victims, the impact on victims, and vic-
tated and/or repeated), and probability of
tims’ receptivity.
A relative total ranking/“score” is required recidivism associated with the crime that
to rank the underlying prisoners’ risk. For led to the current imprisonment.
Support System
the ease of understanding for a broader au-
The prisoners’ background and history is
dience, the prioritization scheme will be re- Beyond the circumstances attached to
just one important element of the overall
calibrated to a 100-point scale as the means the current imprisonment, the criminal
evaluation. Though it is assumed that the
for establishing who may be released early and imprisonment history preceding the
infrastructural support is in place to ensure
and prioritizing the order in which they may crime that led to the current imprison-
the released prisoners’ successful transition
be released. ment must also be contemplated, with
back into society, this is explicitly men-

December 2010/January 2011 | The Actuary | 27

 tioned to confirm that the necessary infra- success of those prisoners released early, • S
 piritual element/development/
structural support and resources are also in experts’ evaluations will also play an im- maturity—accounting for the pres-
place in the forms of monitoring, counsel- portant role in more prospectively forecast- ence of (or maturing) spiritual view
ing, training/education/placement, and ac- ing the chances for success. Counselors, may be anticipated as an indicator
cess to other relevant services required to psychologists, spiritual or other advisors, of emerging favorable change.
sustain a successful release. and any other professionals with expertise
in those areas will be asked for meaningful Other Professional Evaluations
Beyond the infrastructural support, per- guidance and evaluations related to a num- While the expertise of counselors, psycholo-
sonal support systems are imperative for ber of prisoner characteristics: gists and spiritual or other advisors with
the successful transition of released pris- knowledge in those areas is valuable, other
oners. Supportive (as opposed to destruc- • A
 ssaultive tendencies—focusing on professionals’ evaluations will also add in-
tive/encouraging of a return to a criminal the presence or elimination of assaultive sight to the evaluative process. Attorney
evaluations may help to answer such ques-
tions as whether this person stood out in any
At the more personal level, the way—favorably or unfavorably—in the eyes
proposed program is anticipated of the prosecutorial team. Related, but from
the perspective of the other side (subject to
to serve the greater good. … attorney/client privilege), can defense attor-
neys lend any further insight into the chances
past) relationship building blocks must be tendencies and adherence to behavioral for success upon the prisoners’ release?
in place—family, friends, spiritual advi- learning and retraining regimens;
sors, supervisors/bosses—to optimize the Guards, police officers (arresting or familiar
prisoner’s return to society. • C
 ognitive development/maturity— with the individual) and other law enforce-
assessing the prisoners’ progressing ment evaluations may also be insightful—
An element in this measure may include cognitive development and emerging from their perspective, did this person stand
the volume and diversity of visits to the maturity; out favorably or unfavorably in any way,
currently imprisoned individual. For ex- demonstrate any favorable or unfavorable
ample, is the individual’s network one • C
 ontributable skill development/ tendencies, or otherwise show anything the
person on which the individual may be job training—addressing the level evaluation team should be aware of?
entirely reliant for a successful release of educational development, job/
(such that the loss of that person greatly skill/career training, prior transfer- Lastly, prison work supervisor evaluations
jeopardizes the release’s success), or is rable skill development, and other may similarly shed some additional light—
there depth and breadth of the individu- learning; did this person stand out favorably or unfa-
al’s connections (such that the diversity of vorably in any way, demonstrate any favor-
those connections minimizes exposure to • Emotional and relational develop- able or unfavorable tendencies, or otherwise
the risk of any one weakened or lost con- ment/maturity—measuring the pres- show anything the evaluation team should
nection endangering the chances for a ence and growth of favorable emo- be aware of?
successful release)? tional and relational development and
emerging maturity; As just described, evaluations from profes-
Behavioral and Skill Development sionals with wide-ranging expertise are an
and Modification • S
 uicidal tendencies—judging the important complement to assessments of
While the background/history and support presence and/or elimination of sui- the prisoners’ background, history and sup-
system elements serve to capture retrospec- cidal tendencies and adherence to port system for optimizing the selection of,
tive and present elements, respectively, behavioral learning and retraining and anticipated outcomes for, candidates for
that are expected to be predictive for the regimens; and early release.

28 | The Actuary | December 2010/January 2011

Beyond the Framework may also similarly exist at both the feder- For the general public, funds are expected to be
The establishment of a meaningful frame- al level and at the more granular city and available for reallocation to other programs—
work for evaluating prisoners who may be county jail levels—given that all levels of programs that may be expected to more mean-
candidates for early release is an important government seem to be facing ever-mount- ingfully serve more citizens through the reduc-
starting point, but such a framework, in and ing financial pressures. tion of the currently significant costs associated
of itself, does not mean the program will be with housing prisoners and maintaining facili-
successful. The costs and benefits must be Even with the personnel and infrastructural ties by releasing those who will contribute to,
assessed and quantified in order to optimize investment required for such a program, rather than drain funds from, society without
the program’s chances for success. the accompanying savings when compared negatively impacting that society.
to current costs that would otherwise be
Cost/Benefit Analysis required to fund a similar government-run For the released prisoners, a rigorous pro-
Costs program are anticipated to be significant, gram created to optimize their transition
Quantifiable start-up costs include person- achieved via sustainable total reward (sala- back into society will enable and maximize
nel and technology, systems and equip- ries and benefits) costs and anticipated their (and their circle of friends and family)
ment. The right people with the right ex- workplace and technology efficiencies. chances for success, sense of well-being,
pertise, working on the right (cutting edge) and understanding of what it means to be
equipment, are required to design, imple- At a practical level, the expected reduced and what it takes to be a contributory, pro-
ment, monitor and refine the plan on an prison spending will save taxpayer money ductive and law-abiding member of society.
ongoing basis. Necessary roles may include (a message that particularly resonates in the
pre-release evaluations and post-release current environment), free up funds for other Risks
monitoring, counseling/training/placement, programs that may be in greater demand by Establishing such an evaluation program
outcome measurement and quality manage- the public (each citizenry’s priorities will be and managing the program to universally
ment of the evaluation process. different), and ease at least some of the tough successful outcomes can only be accom-
spending choices that governments are cur- plished by anticipating, accounting for and
The right technology, systems and equip- rently being forced to make. The dual mes- overcoming a number of meaningful risks:
ment play an important and complementary sages of more effective programming, cou-
role to the right people, recognizing that this pled with reduced required funding, should • D
 erailment before the program ever
systemic infrastructure must remain cutting echo loudly with government officials seek- gets traction or has a chance to dem-
edge on an ongoing basis to sustain a leader- ing to dampen the criticism they currently onstrate its efficacy, from the failure
ship role in this industry and deliver value face from the constituencies they serve. to get the necessary buy-in from any
not provided in current, otherwise similar, number of potential stakeholders in-
government-run programs. At the more personal level, the proposed cluding politicians (especially those
program is anticipated to serve the greater on the opposite side of the aisle from
Benefits good for both the general public and the re- the party currently in charge), thought
Though the program’s costs are expected leased prisoners. leaders in the media, the law enforce-
to be significant, the benefits and op-
portunities in establishing a viable alter-
native to current state programs may be Cost Per Inmate
limitless. As previously alluded to, the on-
going management of prisons and prison- The average annual operat- $24,000 per inmate. For ad-
ers is big business. ing costs per state and among ditional stats visit: http://www.
facilities operated by the Fed- jailovercrowding.com/index/
The business opportunities to deliver favor- eral Bureau of Prisons are nearly the-problem.
able results are spread across not only the
state and federal prison landscapes, but

December 2010/January 2011 | The Actuary | 29

 robust, dynamic and responsive to en-
vironmental changes. An inability to tell
the program’s story via metrics that dem-
onstrate the program’s efficacy—those
metrics being outcomes that improve
society and the lives of the released pris-
ment and legal communities, victims’ oners, while simultaneously delivering
rights/advocacy groups and impacted meaningful fiscal savings—may similarly
public employees concerned about cut short the life of the business model.
their future employment prospects.
No program of this nature is without risks,
• U
 pon implementation, brutality (or but with the evaluative framework described
other lesser recidivism) by an early- earlier in this article as a starting point and
released prisoner that irreparably dam- ongoing assessments of the efficacy of that
ages society (and, less importantly, this framework to drive meaningful transforma-
program and its reputation). Right now, tions to that structure in real time, we may
Illinois faces this challenge arising from expect to minimize the recidivism risk.
program gaps that led to the release of a
prisoner now connected to a murder. Critical Success Factors
Aligned with the aforementioned risks, criti-
• W
 ith success looms the potential for cal success factors for this program include:
mismanagement of capital investments
and/or loosened controls as a result of • T
 he ability to rally and maintain sup-
exploding growth that yields insufficient port from various affected constituen-
supervision. With the societal responsi- cies through a variety of potential ap-
bility that this program has, along with proaches, including:
personal stakes in this model and the
tough-to-overcome publicity risk faced • Communication with politicians,
with even one violent act by a released effectively done through avenues
prisoner, this business and the clients’ such as regular teaching sessions or
prisoners recommended for early release briefings, regarding the program’s
must be diligently managed. Alongside benefits to demonstrate a mature
that diligent management, investment understanding of the gravity of the
in the appropriate and sufficient level of situation and the importance of the
personnel and equipment must sustain absolute success of this plan;
the anticipated cost advantages of this
program while continuing to ensure the • P romotion of the plan’s benefits
program’s 100 percent success. with media thought leaders—seek
out opportunities to go on the “talk
• Inflexibility with regard to the current show circuit” to answer questions
evaluative framework—recognizing and correct misperceptions;
that what works today may not
necessarily work tomorrow. • Feedback gathering from the law
The framework must be enforcement and legal communi-

30 | The Actuary | December 2010/January 2011

 • T
 rack every release and diligently
A Little History trace their paths to document and
personalize for the program’s clients
According to http://law.jrank.org, result of the Quaker group Penn- the numbers and stories that they may
the first state penitentiary, origi- sylvania Prison Society. It was the relay to their citizens—where the re-
nally called the Walnut Street Jail, Society’s goal to reform the hor- leased prisoners are, what jobs and
came into existence in 1790 as a rible prison system of the time. other societal roles they’ve taken on,
and how the underlying support pro-
gram has minimized recidivism and
empowered the released prisoners to
ties to be confident there are no mize the chances for success, allow live better and law-abiding lives.
gaps in the business model, while time for evaluation and minimize the
simultaneously ensuring their en- risks to society. The list of critical success factors may be
gagement and acceptance of the daunting, but the importance of the topic
program; • A
 relentless focus on sustainable demands the toughest of scrutiny so as to
growth that compromises none of ensure the program’s success and to meet
• E
 ngagement of victims’ rights the intended controls/supervision, the justifiably high standards sure to be de-
groups and the general public in a clients or the program’s reputation. manded by all affected parties.
proactive and transparent manner Recognizing the societal responsi-
to ensure their voices are heard. bility that this program has and the Conclusion
One example may be to place the personal stakes in it, coupled with Rather than serving as an advocacy piece
proposed prisoner evaluation char- the potential for investment misallo- for early release programs, this article is
acteristics on a public website to cations/losing the technology edge intended to describe the framework and
encourage the community to state and/or weakened supervision if strategy needed for mitigating the risk of
their priorities and provide con- growth explodes beyond a control- such programs and optimizing those pro-
structive criticism; lable level, will be the foundations grams’ outcomes. Instead of implementing
that this model is built on to ensure such programs as a means of saving money
• R igorous and repeated duplication ongoing cost advantages and the “0 via the application of arbitrary standards
of the above steps to ensure under- percent prisoner relapse” success of to blocks of prisoners without individually
standing of the program’s goals, the program. assessing the potential risks involved, gov-
deliverables and personal success ernments owe it to their constituencies to
stories; and • F
 lexible thinking related to, and implement a more rigorous program that
unrelenting quality management consistently assesses and monitors the in-
• Effective clarification of the opportu- of, the evaluation framework/tool dividual risks involved and dynamically
nities that are expected to be avail- and the personnel managing it and changes in order to sustain the best out-
able for displaced public employ- responsible for its upkeep. Such comes from such programs. A
ees—dynamically serving the public an approach will proactively and
in a new and exciting environment. dynamically capture, measure and Nickolas J. Ortner, FSA, MAAA, is a managing actuary

appropriately weight only the cri- for Mutual of Omaha. He can be contacted at nick.ortner@
mutualofomaha.com.
• G
 iven the stakes—lives potentially at teria relevant for inclusion in the
risk, with even one misstep—a level of framework described to ensure the
conservatism may be required, particu- absolute post-release success for the
larly in the program’s infancy, to opti- former prisoners.

December 2010/January 2011 | The Actuary | 31

 Education

Double, Double
Toil and Trouble
By Kathleen R. Wong

Or, should I say, double your (CSP-Group/Health, CSP-Individual Life Rationale and Benefits
pleasure, double your fun! I guess it all and Annuity, CSP-Retirement, Advanced The Board of Directors asked the educa-
depends on your point of view. Finance/ERM and Advanced Portfolio tion committee to undertake this extensive
Management) will also be given in the effort as part of a strategic initiative to better
What am I talking about? Of course, I’m refer- fall beginning in 2011. The exams tradi- serve the needs of one of our major stake-
ring to the upcoming initiative to offer all tionally offered in the fall (DP-Group/ holder groups—the candidates.
fellowship-level examinations twice per year. Health, DP-Individual Life and Annuity,
DP-Retirement, and Financial Economic Candidates should benefit from the extra exam
The SOA is taking a giant step forward in Theory and Engineering in the Finance/ administrations in several ways:
addressing one of the persistent complaints of ERM and Investment tracks) will also be
fellowship-level candidates—the fact that most offered in the spring beginning in 2012. • Increased flexibility in planning their
of the examinations are available only once studies
per year. The pre-associateship examinations The education committee took the first step For some candidates, work commit-
are already offered at least twice per year, and toward twice per year FSA exams in 2008 ments make it difficult to study for
more often for those exams available through when the Advanced Finance/ERM (AFE) examinations during certain times of
computer-based testing. But the intensive vol- exam was offered in both the fall and the the year. Right now, if a given exam
unteer and staff effort required to develop spring sessions. AFE is one of the require- is offered only in the spring ses-
fellowship exams has been an obstacle to ments for the CERA designation, and the sion, for example, candidates need
increasing the frequency of those exams. SOA’s Board of Directors wanted to provide to devote intensive study time during
additional opportunities for candidates who the March/April timeframe. In some
For the exam development volunteers, it will were working to obtain the CERA designa- practice areas, that might be a busy
be “double the toil” to build twice as many tion, including current fellows who can work period.
exams in the one-year time frame. But we are obtain the CERA designation by completing
gearing up for the task ahead with enthusiasm the AFE exam and one module.  ersonal circumstances might also
P
and a willingness to do what it takes to “double make a particular exam session incon-
your fun” for candidates. The AFE exam was successfully offered venient for a candidate. Being able
twice in 2008 and has continued to be to skip a session without losing a full
What’s Changing? given two times per year in 2009 and 2010. year’s momentum should give candi-
We are pleased to announce that, begin- The efforts of the AFE exam committee dates more flexibility.
ning in the fall of 2011, we will offer all served as a pilot to develop a process that
FSA-level examinations in both the fall other examination committees can emu- • Reduced travel time to FSA
and the spring sessions. This means that late, or modify as appropriate, in order to Candidates who fail a fellowship exam
the exams normally given in the spring reach the twice per year goal. under the current system must wait a

32 | The Actuary | December 2010/January 2011

 year before re-taking the exam. This can ules) that are recommended as pre- Other
be especially frustrating for candidates ceding that exam. Enhancements
whose only remaining requirement is The education committee
the failed exam!  rom an educational standpoint, this will
F is continually working to
allow curriculum and e-Learning com- improve the SOA’s edu-
 uring that year, the candidate will
D mittees to work with a single body of cational system and the Kathleen R. Wong
either sit out one of the exam sessions knowledge for the specialty track and exam experience for candidates. We listen
or may attempt the other fellowship present it in the way that makes the most to candidate responses to our surveys; we
exam in his track. In the former case, sense. It may be possible to remove brainstorm among the senior volunteers
he has likely increased his travel time redundant material that had been includ- who review our exams; we solicit feedback
by six months due to the idle session. In ed on a given syllabus just to ensure that from academics and professional educa-
the latter scenario, the candidate may candidates had enough background to tors; we talk directly with candidates as
be able to avoid skipping the session, understand the rest of the syllabus. part of our university outreach visits. All this
but will need to switch gears and study input has resulted in the following initiatives
different material.  he recommended order, effective for
T undertaken over the past two years.
examinations and modules completed
In either case, when the candidate after July 1, 2011, is available on the SOA • Consistent standards for examina-
returns to studying for the exam previ- website. tions across tracks
ously failed, she likely will need to Candidates should be choosing their fel-
spend a longer time refreshing her • Comparability among tracks lowship specialties based on their areas
memory than if she had been able to  s noted earlier, the AFE exam has
A of interest or their job requirements, not
re-take the failed exam without the extra been offered to Finance/ERM candi- because one track is perceived to be
six-month wait. dates twice per year since 2008. We less rigorous than another. One of our
think it’s time that candidates taking goals on the education committee is to
It is important to keep in mind that the the other specialty tracks receive the ensure that tracks remain consistent in
reduced travel time is being accom- same opportunity. terms of the amount of reading material,
plished with no reduction in syllabus
requirements or qualification stan-
Did You Know …
dards. We are just allowing the candi-
dates to plan out their exam prepara-
tion more efficiently. There are currently over 850 volunteers
in the education system.
• Improved educational experience
A nother positive result of this
change is that the education com- I n addition to the benefits to candi- the level of difficulty of the questions,
mittees can now recommend the dates listed above, the SOA believes and the passing standards required.
order in which candidates should that the change will be attractive to
attempt the fellowship exams and employers, who may benefit from  ithin the curriculum committees we are
W
modules within their tracks. We do the increased flexibility and the developing improved page count meth-
not expect to set absolute prereq- improved educational approach for odology and bringing greater discipline to
uisites requiring that one exam be their trainees. The increased exam the management of syllabus volume. For
taken before the other. But we do frequency will also bring the SOA in the examination committees we have set
intend to rely on candidates being line with other major actuarial orga- requirements for questions that test higher
familiar with the material included nizations around the world, many of cognitive skills rather than just memoriza-
in any requirements (exam or mod- which offer their fellowship exams tion, and we have continued to refine our
twice per year. content-based passing standards.

December 2010/January 2011 | The Actuary | 33

 Recommended Order
For taking FSA examinations and modules by track

Effective for examinations and modules completed after July 1, 2011 Investment Track Recommendations
• Your choice of the Operational Risk module or the Financial
The fellowship-level examinations will be offered two times per year be- Reporting module may be taken at any time
ginning in the fall of 2011. With this increased frequency the SOA can • Financial and Health Economics module should be taken
now provide candidates with the benefit of a recommended order for before the APMV and FETE examinations
the completion of fellowship-level requirements. The recommendations • Investment Strategy module should be taken after both the
are effective for all exams and modules completed after July 1, 2011. APMV and FETE examinations

There remain no formal prerequisites for taking the SOA’s fellow- Individual Life and Annuities Track Recommendations
ship-level examinations and modules.1 Candidates are permitted to • Financial and Health Economics module may be taken at any
choose the order in which the requirements are attempted. However, time
the Education committees believe that these recommendations pro- • Regulation and Taxation module should be taken before the
vide the most effective guide for candidate success. After July 1, 2011, DP examination and before your choice of the Operational Risk
an examination/module may assume familiarity with material that is module or Financial Reporting module
covered in any requirement that is recommended to come before • DP examination and your choice of the Operational Risk mod-
that examination or module. ule or Financial Reporting module should be taken before the
CSP examination
The recommended order of requirements for each track is shown below.
Retirement Benefits Track Recommendations
Note: The following recommendations address only the two FSA There is a specific recommended order for the five requirements:
examinations and three FSA modules required for each track. 1. Social Insurance module
2. Financial and Health Economic module
Finance/Enterprise Risk Management 3. Operational Risk module or Investment Strategy module
Track Recommendations 4. DP examination
• Financial Reporting module may be taken at any time 5. CSP examination
• Operational Risk module should be taken before the AFE
examination Group and Health Track Recommendations
• Financial and Health Economics module should be taken There is a specific recommended order for the five requirements:
before the FETE examination 1. Financial and Health Economics module
2. Health Systems Overview module
FOOTNOTE: 3. DP examination
1
The Decision Making and Communication (DMAC) module and the Fellowship 4. CSP examination
Admissions Course (FAC) each have their own unique requirements. 5. Pricing, Reserving and Forecasting module

• D
 etailed commentary for candi- model answers will not only provide • Increased volunteer training
dates in model solutions an example of a well-organized, full- Volunteers working on the fellow
Candidates often comment that they credit response; they will also include ship-level examinations and modules
do not have a good understand- commentary about what is being put in many hours of effort creating
ing of what constitutes a complete tested, what the supporting syllabus examination questions, reviewing and
and appropriate response to written sources are, what the cognitive level of modifying questions, developing grading
answer questions. Over the past two the question is, and, where appropri- outlines, creating and grading e-Learning
years, we have been phasing in a new ate, an indication of where candidates assessments, and grading exam candi-
approach to model solutions. Future had trouble with the question. date papers. To support their efforts, over

34 | The Actuary | December 2010/January 2011

 the past two years we have developed tics, obtaining syllabus materials for and FETE examinations as a pilot for
intensive, hands-on training sessions for committee members, typing examina- this longer-term project. If the pilot is
item writers and e-Learning assessment tions, managing the printing process, successful, the SOA expects to develop
graders. Similarly, we provide webcast receiving and distributing papers for study guidance for all examinations.
training each exam session for those grading, producing statistical reports,
who will be grading examinations for and assisting in ways too numerous The education committee currently engages
the first time and in-person feedback to mention. The Board approved an more than 850 volunteers in running the
sessions for all graders. increase in budget to provide addi- SOA curriculum, e-Learning and examina-
tional administrative support as well. tion committees. Many volunteers find their
• Increased staff resources involvement extremely rewarding on both a
In conjunction with the initiative to offer • Forthcoming courseware pilot personal and a professional level, one reason
FSA exams twice per year, the Board allo- A pilot study is being undertaken to cre- that a significant number continue to serve
cated funding to provide more staff sup- ate specially designed study guidance to year after year. With the expanded offer-
port to the education and exam effort. enhance candidates’ ability to prepare ings of the FSA-level exams, the need for
In-house SOA actuaries now participate effectively for the FSA examinations. volunteers will be even greater in the next
as members of the curriculum commit- One part of this project will focus on few years. If you are interested and would
tees and assist examination committees general guidance, applicable to all FSA like more information on the variety of volun-
with question development and review. specialty tracks, about how to study for teer opportunities available, please visit the
These professionals bring continuity and and answer questions on written-answer Volunteer Interest page of the SOA website
technical expertise to the process. examinations. A longer-term goal is to or contact Kathy Wong directly. A
provide exam-specific guidance on how
 he SOA staff also provides excellent
T to approach the material when prepar- Kathleen R. Wong, FSA, CERA, MAAA, is vice presi-

administrative support to the education ing for a particular examination. The dent and actuary for AXA Equitable Life Insurance Co. She
can be contacted at kathleen.wong@axa-equitable.com.
committees—handling meeting logis- education committee is using the AFE

CompetencyFRAMEWORK
DESIGN
your future.
Learn about the new Society of Actuaries (SOA)
Competency Framework—a valuable tool, developed by
actuaries for actuaries! Use the Framework as a guide to help
determine your own career by choosing SOA events that will help
develop any or all of these eight competencies:

• Communication
• Professional Values
• External Forces & Industry Knowledge
• Leadership
• Relationship Management & Interpersonal Collaboration
• Technical Skills & Analytical Problem Solving
• Strategic Insight & Integration
• Results-Oriented Solutions

Visit SOA.org/competency-framework for more information.

December 2010/January 2011 | The Actuary | 35

 The SOA At Work

Annual Meeting
Highlights
I wanted to take a few minutes
to thank all our members who attended,
planned, prepared, and conducted the SOA
2010 Annual Meeting and to share some high-
lights from the meeting:

• T urnout for the meeting was among the

highest ever. The members I spoke with
were very enthusiastic about the meet-
ing, the educational sessions, and the
meeting facilities.
• Mike McLaughlin completed his presidential term and Don Segal providing them a special booth in the exhibit hall to meet representa-
began his. Both were very happy with the meeting and with the tives of the profession and, we hope, some new students (or, more
transition of presidential terms. likely, their parents). We also helped the University of Michigan
• The SOA’s Board meeting was a success. Members received an Actuarial Science program organize and host an alumni reunion
e-mail within hours of the meeting’s conclusion describing key out- at the meeting, focused on bringing together graduates of that pres-
comes from the meeting, which was followed on November 3 by tigious program. We hope to see more schools taking advantage of
the SOA’s third Interactive Leader Session of 2010, in which Don the annual meeting in the future to build their alumni communities.
Segal and Brad Smith,SOA president-elect,discussed key outcomes • We continued our mission of promoting the actuarial profes-
and answered members’ questions (Visit www.soa.org/ILS). In sion’s brand in the media by organizing a series of important
addition, we had a number of leaders of the profession attend the media visits for members active in our Viewpoints and Visibil-
Board meeting, representing the International Actuarial Associa- ity teams. These media outreach visits, like many before them,
tion, the United Kingdom Actuarial Profession, Actuarial Society of continue to build actuaries’ collective reputation as a source of
South Africa, Canadian Institute of Actuaries, Casualty Actuarial So- highly informed, intelligent and unbiased thinking on some of
ciety, and American Academy of Actuaries. the most important issues facing society today.
• We held our first-ever formal recognition of the Society of
Actuaries James C. Hickman Scholars.We organized a special If you missed this year’s annual meeting, make sure you mark your calen-
reception for the first two classes of Hickman Scholars, featur- dar now for next year’s meeting in Chicago—you don’t want to miss all the
ing Margaret Hickman, widow of James Hickman, and their excellent opportunities the SOA annual meeting provides. So, be sure to
son Charles Hickman. Mrs. Hickman spoke movingly of the make your plans to be in the Windy City October 16–19. A
pride her family has in the honor the SOA has given her late
husband through this program. — SOA Executive Director Greg Heidrich
• We recognized our Center of Actuarial Excellence (CAE) schools,

36 | The Actuary | December 2010/January 2011

The Actuarial Profession in the News Professional
The SOA is focused on raising awareness of actuaries in the media. DEvelopment
Recent efforts have been successful. Here are just a few examples:
opportunities
20 Highest-Paying Jobs Top 10 Most Costly, Frequent Medical Enterprise Risk Management
Techniques and Practices
Dale Hall, FSA, CERA, featured in CNN Errors
December 7–9
Money article; actuaries ranked among Actuary Jon Shreve talks about findings
Phoenix, Ariz.
highest-paying jobs. Visit http://money. from the SOA report on medical errors.Visit
cnn.com. Search term: Dale Hall. www.soa.org/newsroom. Search term: Top
2011
10 Most Costly.
Living to 100 Symposium
Seven Steps To A Sound Retirement
January 5–7
FSA Noel Abkemeier and retirement risk Member Jim Toole Interviewed on
Renaissance Hotel at Seaworld
report referenced in MarketWatch. Visit PBS’ Nightly Business Report
Orlando, Fla.
www.marketwatch.com. Search term: Jim Toole, FSA, CERA, discusses the SOA
Retirement Risk Report. study on medical errors. Visit www.soa. ReFocus Conference
org/newsroom. Search term: Jim Toole PBS. February 27–March 2
2010 Risk Innovator™ Winners: Four Seasons Hotel
Financial Services View all of these articles by going to www. Las Vegas, Nev.
Frank Sabatini, FSA, CERA, named among soa.org/newsroom and clicking on the
winners. Visit www.soa.org/newsroom. Profession In The News link. A ERM Symposium
Search term: Risk Innovator Winners. March 13–16
Swissotel
The Retirement Savings Menu: A Visual Chicago, Ill.
Take on How Much You Should Save
Read FSA Steve Vernon’s recent column Investment Symposium
about saving for retirement. Visit: http:// April 11–12
moneywatch.bnet.com. Search term: Millennium Broadway

Retirement Savings Menu. New York, N.Y.

Life Insurance Conference

April 11–13
Medical Errors Top $19.5 Billion Annually In New SOA Research
Caesars Palace
Report
Las Vegas, Nev.
A new report authored by the Denver of- and an assistant dean of a medical col-
fice of Milliman, Inc. and sponsored by lege, active in medical disaster prevention Retirement Industry Conference
the SOA’s Health Section pegs measur- and relief. To date, the report has garnered April 13–15
able medical errors at $19.5 billion per significant media attention including an Caesars Palace
year. The Milliman team used an extensive interview on the Nightly Business Report Las Vegas, Nev.
claims database to estimate the frequency with Jim Toole, who chaired the project
and cost impact of medical errors on the oversight group, and coverage in the Wall 2011 Life and Annuity Symposium
health care system and the U.S. economy. Street Journal. May 16–17
The work was guided by a diverse team Sheraton New Orleans Hotel
of actuarial professionals, some with clini- The report is available at: http://www. New Orleans, La.
cal and regulatory backgrounds, and also soa.org/research/health/research-econ-
included a physician, health risk manager measurement.aspx A View all Professional Development
opportunities by visiting www.soa.org
and clicking on Event Calendar.

December 2010/January 2011 | The Actuary | 37

 Attention New SOA Study Identifies Barriers To Financial Planning Advice

Readers! Many experts predict that even after America increased, their financial knowledge has
If you have an idea for an article emerges from its present economic prob- not kept pace. As a result, many workers ap-
you think should appear in The Ac- lems a more formidable financial challenge proaching retirement are realizing they do
tuary, or a response to something looms just over the horizon as its citizens not have enough retirement savings accu-
you have read in these pages, tell have fallen behind on saving for retirement. mulated and are not equipped to solve this
us about it by sending an e-mail to With professional guidance, a generation of problem. There is a widespread lack of both
theactuary@soa.org. future retirees could correct their course be- financial knowledge and formal, long-term
fore it’s too late,but many are not seeking that financial planning among the middle class.
help. Results of a new study sponsored by the The findings from this study, “Barriers to Fi-
SOA’s Actuary of the Future Section and the nancial Advice for Non-Affluent Consumers,”
Product Development Section highlight the uncover 10 barriers to financial advice and
need for more access to affordable, quality fi- help address the gaps in knowledge. To view
nancial advice for non-affluent U.S. consum- this study, please see http://www.soa.org/
ers,those of moderate or low net worth.While research/research-projects/life-insurance/
Americans’ responsibility for retirement has research-barriers-consumers.aspx. A

38 | The Actuary | December 2010/January 2011

 More than 400 senior executives, directors, and risk
management experts gathered at the 2010 Enter-
prise Risk Management Symposium in Chicago to
present the latest on ERM thinking and practices.
Make sure you don’t miss the next opportunity—
our 2011 ERM Symposium—to learn from industry
leaders about this emerging discipline and expand

Visit www.ermsymposium.org
your ERM skills.

to learn more
Highlights include:about this global conference.
• Top risk management experts offering their
perspectives on key risk issues
The 9th Annual Premier
• Pre-Symposium seminars on ERM topics
Nearly 500 senior executives, directors, Highlights include: Global Event on ERM!
• Networking opportunities to renew and expand
and risk management experts gathered • Top risk management experts offering
your list of ERM contacts
at the 2009 Enterprise Risk Management their perspective on key risk issues
• Call for papers program showcasing new
(ERM) Symposium in Chicago to 2011 ERM Symposium
• Pre-Symposium seminars on ERM topics
research March 13-16, 2011
present the latest on ERM thinking and
• Exhibitors demonstrating their ERM services • Networking opportunities to renew
practices. Make sure you don’t miss
and knowledge Swissôtel Chicago
and expand your list of ERM contacts
the next opportunity—our 2010 ERM Chicago, IL
Symposium—to learn from industry • Exhibitors demonstrating their ERM

www.ermsymposium.org
Visit leaders about this emerging discipline services and knowledge
and expand your ERM skills. • Call for papers program showcasing
to learn more about this global conference.
new research

Presented by the Casualty Actuarial Society, Canadian Institute of Actuaries, Professional Risk Managers’ International Association and Society of Actuaries

Colegio Nacional de
Actuarios, A.C.

and with collaboration of the Asociacion Mexicana de Actuarios, Colegio Nacional de Actuarios, and Enterprise Risk Management International Institute.
 SOA Annual Meeting & Exhibit

2O1O
Oct. 17–20, 2010
Hilton New York
New York, NY

The Society of Actuaries would like to acknowledge and thank the 2010 SOA Annual Meeting & Exhibit event
partners and exhibitors for their support, leadership and commitment to the actuarial profession.

ev ent pa rtners

Exh ibi tors

Actex Publications Gen Re Oliver Wyman Actuarial Consulting, Inc.

Actuarial Careers, Inc. Generali USA Life Reassurance Company Optimum Re
The Actuarial Foundation GGY AXIS Pagos Inc.
Actuarial Resources Corporation Guggenheim Life and Annuity Company Polysystems, Inc.
Aetna Hannover Life Re Prudential Financial
Algorithmics, Inc. Humana Pryor Associates
American Academy of Actuaries IBM Insurance Outsourcing Services Quantitative Risk Management
AmeriLife The Infinite Actuary, LLC RGA Reinsurance Company
Andover Research, Ltd. Innovative Reinsurance Group Reinsurance Management Associates
Barrie + Hibbert Insight Decision Solutions SCOR Global Life US Re
Canada Life Reinsurance Interactive Data Stewart Search Advisors
Centers of Actuarial Excellence Internal Revenue Service, Employee Plans SunGard
Claim Analytics Jacobson Group Towers Watson
Cycle Computing LECG Transamerica Reinsurance
Dietrich and Associates, Inc. Lewis & Ellis Valani Consulting
Deloitte Consulting LLP MIB Solutions, Inc. Verisk Health, Inc.
DW Simpson Global Actuarial Recruitment Microsoft
Ernst & Young Milliman
FactSet Research Systems, Inc. Munich American Reassurance Company

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