All about risk
Video description:
SOA leadership and members discuss the University-Earned Credit (UEC) program. Watch this recording of the May 24 member town hall about UEC. If you have any additional questions email us at membercomms@soa.org. Learn about the UEC program by visiting https://www.soa.org/education/resources/uec/uec-program/
Access the FAQs at www.soa.org/education/resources/uec/uec-faq/
Publication Date: 27 May 2021
Publication Site: Society of Actuaries on YouTube
Description:
It’s not just a song, it’s a history lesson!
St. Francis Dam Disaster by Frank Black and the Catholics off of the album Dog in the Sand (2001 Cooking Vinyl)
Many of the pictures were culled from https://scvhistory.com/scvhistory/stfrancis.htm
They have a lot of info on the St. Francis Dam disaster and it’s worth checking out if you want to see more.
Image:
Author(s): Skippy .Bob
Publication Date: 1 December 2013
Publication Site: YouTube
Description:
I take a look at the Actuarial Standard of Practice 56: Modeling — in effect as of October 2020.
Links: Keep Up With the Standards: On ASOP 56, Modeling
https://www.soa.org/sections/modeling/modeling-newsletter/2021/april/mp-2021-04-campbell/
ASOP 56: Modeling
Author(s): Mary Pat Campbell
Publication Date: 3 May 2021
Publication Site: Meep’s Math Matters at Youtube
Excerpt:
You can’t compare results from Bayesian and frequentist methods because the results are different kinds of things. Results from frequentist methods are generally a point estimate, a confidence interval, and/or a p-value.
…..
In contrast, the result from Bayesian methods is a posterior distribution, which is a different kind of thing from a point estimate, an interval, or a probability. It doesn’t make any sense to say that a distribution is “the same as” or “close to” a point estimate because there is no meaningful way to compute a distance between those things. It makes as much sense as comparing 1 second and 1 meter.
Author(s): Allen Downey
Publication Date: 25 April 2021
Publication Site: Probably Overthinking It
Excerpt:
In courtrooms, mixing up the probability of “A given B’” with “B given A” is known as the “prosecutor’s fallacy”. In 1999, a court convicted Sally Clark of the murder of her two sons, in part because a medical expert claimed the chance of two accidental cot deaths was one in 73m. Even if this number was right – which it isn’t – it did not reflect the chance she was innocent. A double murder was also very rare: the relative likelihood of the two explanations was key and with new evidence and better statistical reasoning, an appeal court quashed the conviction.
There was controversy after a recent Observer headline referred to Bayes’s theorem as “obscure”. His ideas may be little known by the public, but they are growing among scientists. Many complex analyses done during the pandemic have been “Bayesian”, including modelling lockdown effects, the ONS infection survey, and Pfizer-BioNTech’s vaccine trial. The term “credible interval”, rather than “confidence interval”, is the giveaway.
Last week, Cass Business School announced the renaming of its institution after Bayes and his theorem. The obscure tomb in nearby Bunhill Fields is worth a visit.
Author(s): David Spiegelhalter, Anthony Masters
Publication Date: 25 April 2021
Publication Site: The Guardian
Link: https://www.soa.org/sections/modeling/modeling-newsletter/2021/april/mp-2021-04-campbell/
Excerpt:
If nothing else, having a checklist to go through while working on modeling can help you make sure you don’t miss anything. Hey, ASB, make some handy-dandy sticky note checklists we can stick on our monitors to ask us:3.1 Does our model meet the intended purpose?
3.2 Do we understand the model, especially any weaknesses and limitations?
3.3 Are we relying on data or other information supplied by others?
3.4 Are we relying on models developed by others?
3.5 Are we relying on experts in the development of the model?
3.6 Have we evaluated and mitigated model risk?
3.7 Have we appropriately documented the model?
Author(s): Mary Pat Campbell
Publication Date: April 2021
Publication Site: The Modeling Platform at the Society of Actuaries
Link: https://www.ipe.com/home/ahead-of-the-curve-modelling-the-unmodellable/10051869.article
Graphic:
Excerpt:
In his youth, the economist Kenneth Arrow analysed weather forecasts for the US Army. When he found that the predictions were as reliable as historical averages, he suggested reallocating manpower. The response from the army general’s office? “The general is well aware that your division’s forecasts are worthless. However, they are required for planning purposes.”
Even before COVID-19, many shared that scepticism of forecasts. The failure to foresee the 2008-09 financial crisis started a debate on economic modelling. Over the past year, the performance of epidemiological models has not resolved this quandary.
Investors have long known that “all models are wrong, but some are useful,” to use the statistician George Box’s pithy idiom. But, there are modellers who use this defence to preserve models beyond usefulness. Meanwhile, there are unrealistic expectations from consumers of models including investors, policymakers and society. They assume that complex issues are easy to forecast, when some things are just unknowable. This gap begs the question of what investors should do.
Author(s): Sahil Mahtani
Publication Date: April 2021
Publication Site: Investments & Pensions Europe
Link: https://jacobian.org/2021/apr/7/embrace-the-grind/
Excerpt:
For example, I once joined a team maintaining a system that was drowning in bugs. There were something like two thousand open bug reports. Nothing was tagged, categorized, or prioritized. The team couldn’t agree on which issues to tackle. They were stuck essentially pulling bugs at random, but it was never clear if that issue was important.. New bug reports couldn’t be triaged effectively because finding duplicates was nearly impossible. So the open ticket count continued to climb. The team had been stalled for months. I was tasked with solving the problem: get the team unstuck, get reverse the trend in the open ticket count, come up with a way to eventually drive it down to zero.
So I used the same trick as the magician, which is no trick at all: I did the work. I printed out all the issues – one page of paper for each issue. I read each page. I took over a huge room and started making piles on the floor. I wrote tags on sticky notes and stuck them to piles. I shuffled pages from one stack to another. I wrote ticket numbers on whiteboards in long columns; I imagined I was Ben Affleck in The Accountant. I spent almost three weeks in that room, and emerged with every bug report reviewed, tagged, categorized, and prioritized.
Author(s): Jacob Kaplan-Moss
Publication Date: 7 April 2021
Publication Site: Jacob Kaplan-Moss
Link: https://www.thinkadvisor.com/2021/04/06/actuaries-find-race-and-ethnicity-disclosure-gap/
Excerpt:
About 12% of U.S. residents are Black, and 15% are Hispanic or Latino.
In the insurance industry, 12% of employees are Black and 12% are Hispanic or Latino.
Just 4.4% of new SOA members are Black, and 3.7% of new members are Hispanic or Latino.
Author(s): Allison Bell
Publication Date: 6 April 2021
Publication Site: Think Advisor
Link: https://actuariesclubofboston.com/Spring-2021-Meeting/
Preliminary Agenda:
Current Schedule:
Week 1
Monday, May 10: (General) Actuarial Transformation: Trends & Insights across Data, Processes, Models, and PeopleTuesday, May 11: (Life) Consolidated Appropriations Act, 2021: Changes to IRS code Section 7702
Wednesday, May 12: (General/Professionalism) Emerging Professionalism Issues in 2021
Thursday, May 13: (Investments) Macro Economic & Market UpdateThursday, May 13, 4pm EDT: (General) Networking Session
Friday, May 14: (Health) The Role of Behavioral Health‐Now and in the FutureWeek 2
Monday, May 17, 9am EDT: (General) Actuaries Working in International Landscape
Tuesday, May 18: (Health) Health Technology, Consumerism and the Explosion of Telehealth
Wednesday, May 19: (Pension) New Pension Relief under ARPA: Its Implications for Pension Plans
Thursday, May 20: (Life/Annuities) Mortality Differential by Socioeconomic Categories in the US
Friday, May 21: (Life/Annuities) Life Reinsurance 101 Panel Discussion
Date accessed: 6 April 2021
Publication Site: Actuaries Club of Boston
Link: https://www.soa.org/sections/reinsurance/reinsurance-newsletter/2021/march/rsn-2021-03-poon-affat/
Excerpt:
The phrase “coverage gap,” heard often from life insurance company executives, is defined as “the shortfall in the amount of life insurance cover necessary to maintain the current living standards of dependents.” Life insurance companies devote extraordinary amounts of time, effort, and expense trying to educate underinsured individuals about the need to protect themselves and their families from this gap by buying more cover. Could our industry not be addressing one of the key issues leading to the lack of consumer enthusiasm for our products?
Here’s the issue: insurance products and contracts are not consumer-friendly. To the average person, life and living benefits products are at least as byzantine as Brazil’s political system, and the language of insurance contracts could almost be considered an actual dialect. Insurance is thus fertile ground for the manifestation of rational ignorance among potential customers, who are already known to be more likely to pay attention to information about it if it comes from friends and social media posts. (I pity the buyer researching concepts and options such as pure protection, accumulation, critical illness, disability income, or long-term care.)
Author(s): Ronald Poon-Affat
Publication Date: March 2021
Publication Site: Reinsurance News at the Society of Actuaries
Link: http://www.actuarialstandardsboard.org/wp-content/uploads/2021/03/asb2020Annual.pdf
Excerpt:
The Pension Committee, chaired by David Kausch, continued work on ASOP No. 27,
Selection of Economic Assumptions for Measuring Pension Obligations, and ASOP No. 35,
Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension
Obligations. The ASB adopted both revisions in June.
The Pension Committee also continued its work on ASOP No. 4, Measuring Pension
Obligations and Determining Pension Plan Costs or Contributions.
Date Accessed: 27 March 2021
Publication Site: Actuarial Standards Board