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Professionalism challenges facing today’s actuary
Neil HilaryMumbai 18-19 June 2015
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Actuaries blasted in wake of UK’s pensions crisis
Worldcom's ex-boss gets 25 years
Double rebuke to actuaries over savings products
Gangmaster culture spreads across
Britain.
Internet scandal forces Japanese stock exchange
to halt trading
Doctor accuses drugs giant of 'unethical' secrecy
Actuaries ‘need to be overseen’
BA price-fixing investigation
Faked BBC phone-in competitions
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What are Business Ethics?
… the application of ethical values to business behaviour …
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© IBE
Identifying values
Business values
Ethical values
Respect
Openness
Integrity
Transparency
Honesty Efficiency
Profitability
Quality
Trust
Customer focus
Forward thinking
Performance Reliability
Teamwork
Responsibility
Fairness
Profit
Market Share
Sales
SharePrice
Bonuses
League tables
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Why Bother?
Sets the tone of the business Underlines consistency of conduct Underpins risk management Competitive advantages in recruitment and
retention of staff Attractive to customers It pays! (in the long term)
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Why bother?.........Because:
Core ethical values
Expressed in a Code of Ethics
Influences conduct
Reinforces corporate
culture
Reduces risk
Enhances trust
& reputation
&
Sustains financial
performance
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Ethics and compliance debate
Ethics Prevention Principles based Values driven Implicit Spirit of the law Discretionary
Compliance Detection Law based Fear driven Explicit Letter of the law Mandatory
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Hot Topics in Business Ethics
Bullying & harassment Misleading (numerical) information Bribery & corruption Speaking up/whistleblowing Conflicts of interest Marketing policies Work/home balance
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Simple ethical tests for a business decision Legal
Is it allowed?
Transparency:Do I mind others knowing what I have decided?
Effect:Who does my decision affect or hurt?
Fairness:Would my decision be considered fair by those affected?
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Some red flagsIf you hear someone say any of these, you can expect
something unethical is about to happen! “Well, maybe just this once.” “No one will ever know.” “It doesn’t matter how it gets done as long as it gets done.” “It sounds too good to be true.” “Everyone does it.” “Don’t worry, it’s part of the culture.” “Shred that document.” “We can hide it.” “No one will get hurt.” “We didn’t have this conversation.” “I don’t want to know.”
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Professionalism and Ethics
Sounds familiar?
Is professionalism just another name for business ethics?
Does it have extra dimensions?
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Professionalism in Practice
Professionalism concerns behaviour of professionals and the profession which will:
maintain the reputation and integrity of the profession
serve the interests of our clients serve the public interest (common good)
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Professionalism at two levels
professional issues facing the profession, e.g. responding to regulators helping to educate government, the media and public ensuring that the profession is ‘fit for purpose’
individual matters of professionalism, e.g. high ethical standards adhering to the code and standards of practice reporting if necessary (whistle-blowing)
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Professionalism for the individual - 1
fiduciary relationship with client or employer focusing on how issues may affect stakeholders
and bringing such issues to attention of the client
addressing the questions the client should ask or which those affected may ask
understanding and communicating well operating within competence and experience
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Professionalism for the individual - 2
readiness to speak your mind – not ‘compliant’ integrity in advice prepared to report (blow the whistle) if necessary not taking a narrow technical view operating within code and standards of practice demonstrating good judgement
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What are people looking for in a professional adviser?
integrity objectivity knowledge experience being up-to-date and relevant sound judgement good communication
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Benefits to the public of a profession
quality assurance (education, CPD, standards) reliability and relevance of professional advice availability of the required service fiduciary relationships with clients possibility of complaint and redress concern for the interests of third parties
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Earning trust
We need to build a basis for trust, starting with openness transparency accountability
We need to earn respect through the quality of our work our relationships and integrity
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Generic professional issues
economy with the truth
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Generic professional issues
economy with the truth answering the question as asked …
???....
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Generic professional issues
economy with the truth answering the question as asked not making clear the limits of advice
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Generic professional issues
economy with the truth answering the question as asked not making clear the limits of advice not considering the wider impact
…on third parties
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Generic professional issues
economy with the truth answering the question as asked not making clear the limits of advice not considering the wider impact
…on third parties failing to blow the whistle
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Unacceptable professional behaviour
poorly founded public criticism of other actuaries not showing respect for diverse people and views denigrating actuaries from other traditions rudeness or talking down to non-actuaries
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Unacceptable commercial behaviour
using position at one employer to develop another taking commercial information to another firm competing for business on assumptions cutting corners to stay within budget
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Where might we now be at risk?
over-reliance on complex models underestimating the fatness of the tail (not) treating the customer fairly poor communication of risk inadequate scrutiny and peer review conflicts of interest
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Do we see ourselves as we want to see ourselves…
…or as others see us?
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Don’t let time and change overtake us!