Whilst at the International Congress of Actuaries, I took the opportunity to visit the University of Cape Town. This has a large and successful actuarial science program, and a lot of very bright students (and staff!). I spent my time at the university talking about enterprise risk management (ERM) and why I think actuaries are so well-suited to expand their influence in this area.
ERM is the management of risk for an enterprise as a whole, where an “enterprise” can be any sort of institution such as a company, pension scheme or charity. One of the key aspects of ERM is that all of the diverse risks faced by an organisation are assessed and managed consistently and together. To do this requires some complex mathematical techniques, which clearly plays to the strengths of actuaries; however, there is more to it than just doing sums. For ERM to be implemented successfully, there must also be a subjective oversight of the risks and a common-sense approach to dealing with those risks that cannot be quantified. This is a core part of actuarial work, which is why I think ERM is something that actuaries can help with.
Actuaries around the world share this view. That’s why I was at Kyoto University earlier this year, to teach Japanese actuarial students about ERM, and why we teach it at the University of Kent. More importantly, 14 countries have signed up to the new Chartered Enterprise Risk Actuary (CERA) designation, giving formal recognition of those trained in ERM techniques. ERM has also featured strongly in the presentations at the Congress here in Cape Town. It will be interesting to see how this area develops, but personally I think the future looks bright.