1. ACTUARY DIAF Vietnam - 07/10/2015 Minh Thanh NGO MENTION DE CONFIDENTIALITÉ

2. Summary 1.Actuaries and missionsP.01 2.Actuaries in banking servicesP.03 2 | Actuary I 7 Octobre 2015 MENTION DE CONFIDENTIALITÉ

3. An actuary is a business professional who deals with the measurement and management of risk and uncertainties.  « An actuary is part super-hero, part fortune-teller and part trusted advisor » (source : Beanactuary.org) Beanactuary.org  Actuary uses mathematical skills to measure the probability and risk of future events Actuary skills are in great demand in financial sector, particularly in insurance, investment and pensions.  Consultancies – offering advice on issues such as acquisitions, mergers, and financing capital projects and also on occupational pension schemes  Investment – involved in research and on the pricing and management of investments, particularly in mitigating the risk of investment  Insurance – providing a service to companies which need a huge range of numerical information investigated, analyzed and explained, for example to create and price polices, or to ensure they have enough to cover claims.  Pension – designing and advising on company pension schemes, especially placing a value on accumulated pension commitments However, there are many areas where actuarial skills may come in handy:  Transportation such as shipping and air travel  Energies such as utilities, oil, and gas  Environment such as climate change  Even government institutions (Social Security, Department of Labor or Medicare to manage and develop regulations and legislation. 1. Actuaries and missions (1/2) 3 | Actuary I 7 Octobre 2015 MENTION DE CONFIDENTIALITÉ

4. Actuaries in number (source : L’année actuarielle – special edition for 120th anniversary of Institut des actuaries) 1. Actuaries and missions (2/2) 4 | Actuary I 7 Octobre 2015 MENTION DE CONFIDENTIALITÉ

5. Actuaries are working across a range of banking roles, predominately in front-office investment banking, middle office finance and credit risk related roles. Banking actuaries come from a diverse range of backgrounds, mainly life and general insurance 2. Actuaries in banking services: Facts (1/2) 5 | Actuary I 7 Octobre 2015 MENTION DE CONFIDENTIALITÉ

6. Actuaries are working across a range of banking roles, predominately in front-office investment banking, middle office finance and credit risk related roles. Banking actuaries come from a diverse range of backgrounds, mainly life and general insurance Investment-trading analysis, portfolio management and technical pricing are skills that actuaries share with quantitative analysts Bancassurance, insurance-linked securities pricing, asset liability management and other common areas of banking and insurance are the fields that actuaries have advantages. Credit risk modeling roles are for actuaries with statistical modeling and programming skills Risked based capital modeling are also the fields that need actuarial skills. Regulatory change, in particular, the Basel III is also the playground for actuaries with technical skills of liquidity risk measurement and modeling. 2. Actuaries in banking services: Facts (2/2) 6 | Actuary I 7 Octobre 2015 MENTION DE CONFIDENTIALITÉ

7. Naturally, insurance is also a specific domain in finance. In particular, actuaries were ‘mathematicians in insurance’ for centuries, as old as banking, and long time before computers were invented! Historically, actuaries already participated actively in banking investments (derivatives trading, bond and equity portfolio management, asset and liability management). Actuarial training: - Solid background in mathematics: statistics, economic theories, probability, stochastic calculus and optimization. - Insurance Business: strength of actuaries with understandings of accounting, corporate finance, enterprise risk management (ERM) and laws, especially regulatory changes (Solvency II, Basel III, IFRS). - Adaptation: with both broad-business and deep-technical backgrounds, actuaries are easily catching up with global trends and playing important roles (Big Data - Machine Learning, Cyber-Insurance, Micro-insurance, Durable Development, etc.) - In particular banking: Methodologies of pricing and risk management are converging in finance and insurance. 2. Actuaries in banking services: Why? 7 | Actuary I 7 Octobre 2015 MENTION DE CONFIDENTIALITÉ

8. Asset Liability Management (ALM) is a technique of liquidity and interest rate management which began in Anglo-Saxon establishments since 1970s. After a sequence of financial crises, ALM comes back as a central tool for risk management and regulatory reporting, especially in large financial institutions. Traditionally, banking sector pays more attention in ‘Asset’. Actuaries, however, specializes more in ‘Liability’ (pricing insurance products). As the markets grow exponentially thanks to technology, the financial products are more and more complicated. The systemic risks are more dangerous than ever, e.g. the subprime crisis in America =>The need for a more ‘zen’ view: Asset Liability Management. ALM looks at the evolution of Asset and Liability at the same time for long periods. It integrates all the long term models in a Big picture. More specifically, ALM managers now pay attention not only to interest rates and liquidity risks but work closely between risk managers and portfolio managers. Asset Allocations are then the natural reaction of the Bank (or Insurance company) to adjust Strategic Planning regarding ALM measurement. As the models are more and more mathematically sophisticated, ALM itself also develops rapidly towards a technical nature, which needs the technique professionals as financial engineers and actuaries. 2. Actuaries in banking services : Example ALM and Asset allocations 8 | Actuary I 7 Octobre 2015 MENTION DE CONFIDENTIALITÉ