1. Professionalism challenges facing today’s actuary Neil Hilary Mumbai 18-19 June 2015

2. 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

3. What are Business Ethics? … the application of ethical values to business behaviour …

4. © 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 Share Price Bonuses League tables

5. 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)

6. 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

7. 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

8. Hot Topics in Business Ethics  Bullying & harassment  Misleading (numerical) information  Bribery & corruption  Speaking up/whistleblowing  Conflicts of interest  Marketing policies  Work/home balance

9. 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?

10. Some red flags If 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.”

11. Professionalism and Ethics Sounds familiar? Is professionalism just another name for business ethics? Does it have extra dimensions?

12. 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)

13. 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)

14. 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

15. 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

16. What are people looking for in a professional adviser?  integrity  objectivity  knowledge  experience  being up-to-date and relevant  sound judgement  good communication

17. 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

18. 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

19. Generic professional issues  economy with the truth

20. Generic professional issues  economy with the truth  answering the question as asked … ? ? ?....

21. Generic professional issues  economy with the truth  answering the question as asked  not making clear the limits of advice

22. 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

23. 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

24. 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

25. 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

26. 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

27. Do we see ourselves as we want to see ourselves… …or as others see us?

28. Don’t let time and change overtake us!