19 February 2019
The Managing Uncertainty with Professionalism Working Party seeks to develop general and simple principles to support actuaries in managing and communicating uncertainty in all fields.
The working party arose from a specific concern that, by quoting '1 in 200' numbers for capital requirements under Solvency II, actuaries were, perhaps unwittingly, being party to giving false confidence about the financial strength of insurers. This issue naturally led on to broader reflections on uncertainty, looking beyond the actuarial profession and even beyond the insurance industry.
With a particular focus on decision making where there is uncertainty, the working party has developed six high level Uncertainty Principles that can be used in supporting, making and critiquing decisions:
- Face up to uncertainty
- Deconstruct the problem
- Don't be fooled (un/intentional biases)
- Models can be helpful, but also dangerous
- Think about adaptability and resilience
- Bring people with you
The working party presented their paper, Managing Uncertainty: Principles for Improved Decision Making, at a sessional research event on 18 February 2019. The paper, along with other working party outputs can be found on the Managing Uncertainty with Professionalism webpage.