The Joint Forum on Actuarial Regulation (JFAR) has published its Risk Perspective: 2018 Update setting out its collective view on current risks to high quality actuarial work.
In its report the JFAR - a collaboration between regulators involved in actuarial work - has reconfirmed nine distinctive risk hotspots impacting actuarial work. The hotspots relate to current or emerging risks which, due to their changing nature or level of uncertainty, pose increased risk to the public interest. These are:
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political and legislative risk;
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regulatory change;
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market performance and uncertainty;
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climate-related risk;
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financial security;
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pension scheme management;
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technological change - automation and digitisation, Big Data, Artificial Intelligence and cyber risk;
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terrorism and cyber-crime; and
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mortality.
It is recommended actuaries take these hotspots into account when advising decision-makers and collaborate with other experts and users of actuarial work to mitigate the risk to the public interest. Technological change in the transport industry, for example, is occurring at a rapid pace and may require changes to the data, models or assumptions currently used by actuaries. New technology like pay-as-you-drive apps could dramatically alter the claims experience for motor insurers and actuaries should ensure their advice to decision-makers reflects the latest developments.
While hotspots should be monitored by actuaries to enable them to provide risk mitigation, many may also give rise to opportunities. For example, actuaries may be able to help users to model climate-related risks, use new data sources to help design products for vulnerable groups, or advice on the new types of pension schemes coming out of Department for Work and Pensions consultations.
Full press release
Full report
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