Risk management: research working parties

Ethics is the main area of concern for the public facing decisions made by AI-driven models and this issue needs a high level of focus and skills that actuaries can provide.

Very often AI models take over decisions and can have strong bias with a dramatic impact on organisations both in financial and reputation terms, as well as on individuals.

Developing a good or best practice framework for governing and managing the risks associated with the use of new AI and data-driven techniques by the financial services industry will be one of the areas of focus for this working party.

The overarching objective of the Black Swans Working Party is to be a source of knowledge and expertise within the Institute and Faculty of Actuaries (IFoA) on matters relating to systemic risk planning and insurance, by developing a model to allow for a comprehensive and affordable systemic risk insurance to be offered, protecting the UK safeguarding society and livelihoods from these extreme risks.

The working party aims to develop a holistic framework to assess Environmental, Social, and Governance factors across the breadth of an organisation (outside of focussing on investment applications) and the effective management of the risks associated with these factors.

This working party aims to explore what constitutes best practice in the use of proxy modelling and considers the results of the PRA Proxy Modelling survey on best observed practice.

The topic of proxy modelling is broad, so the aim of this working party is to focus on some of the key points highlighted by the PRA:

• How to optimally select calibration scenarios;
• How to efficiently validate the fit of “lite” models;
• The alternatives to the roll forward methodology; and
• How to improve the accuracy of roll forward approaches.