Actuaries and Risk Management: Interview with Gloria Yu - YouTube

Hi I'm Gloria Yu. I'm a Director at Deloitte Actuaries and Consultants, and I

graduated from UNSW back in 2004. So, I was privileged to receive the Co-op

scholarship at UNSW and that essentially gave me the opportunity to

work at a number of firms before I graduated and so I had the chance to

work in a number of general insurance companies as well as life insurance

companies and across consulting as well as Corporates. So, when I graduated I

started in general insurance consulting at KPMG and then I moved on to Westpac

general insurance and it was a great time because, I got involved in the

merger of Westpac and St George Bank and got to look at the integration of

the insurance portfolios for both entities and I've got to work with lots

of different stakeholders whether it's actuarial or claims or marketing, IT,

legal and risk and so on and so forth. After that I was asked to join Deloitte

as a Director to build their general insurance practice and that has been a

really fun time. I've been there for five years now. I suppose one of the

highlights was to actually go and look after the Asia-Pacific general insurance

team, which spanned across a number of different countries so you can imagine

there are quite a number of challenges there but it was all really exciting

times and I also got to take on the role of Statutory Actuary for a number of

Asia-Pacific general insurers and re-insurers.

I'm in actuarial consulting so essentially that means, I get involved in a variety

of very, very different projects. So I'm practicing as a general insurance

actuary but also because of my interest in risk management I get to do a bit of

both as well. So risk management is a very broad area so if you sort of think

about what actuaries do in general, we are all about managing uncertainty and

so that's essentially what risk management is about and to me that is a

really exciting area because we can actually bring to bear the actuarial

skill set to areas which are potentially not seen as traditional actuarial space.

So what I mean by that is, if you think about risk management it actually

straddles across a number of different practice areas.

So just because say I'm involved in general insurance doesn't mean that I

purely do general insurance and I don't touch risk management.

Likewise, if somebody was involved in life insurance or superannuation or

health insurance, we're all actually involved in risk management in some way

shape or form. So it's about having that different mindset to understand well

actuaries are dealing with risk management and so what do we do in that space, and

there are a number of elements to that and one is more the traditional

statutory or reserving roles that actuaries take on or even pricing roles

as well. So in that sort of capacity an actuary will need to comment on the

suitability and adequacy of the risk management framework and there are

prudential standards that govern these types of work, essentially saying that

the statutory actuary or appointed actuary will need to comment on the risk

management framework on an annual basis and to submit that to APRA as a

regulator as well.That's one side, the other side is looking at how much

capital we need to hold as an insurer to make sure that we actually support the

risks that the insurer has taken on. A lot of that is around looking at the

systems, the processes and the people who are involved in these areas and making

sure that they are appropriate to the size, the complexity of the business and

also the book of the business in general. The other side, which is another

element of actuarial work is very much looking at the risk function of an

entity so, this is where actuaries can get involved in looking at writing up

risk appetite statements, looking at what is the risk management strategy that a

company might be looking at, reviewing some of the risk management framework

that a company has as well. So essentially incorporating a lot of

the elements that we as actuaries learnt in our traditional fields but really

expanding it to a wider area and you'll notice also that CROs or the Chief Risk

Officers nowadays some of them are actually actuaries as well so that's a

great space for us to be in. Risk management essentially is important for

every single company regardless of which industry you're involved in. So from a

traditional actuarial perspective a lot of actuaries get involved in risk

management through insurers as well as banks because that is our

bread and butter, day-to-day type of work. There are also other organisations even

in non-financial services sector which actuaries are starting to get involved

in, whether it's around the operational risk or whether it's about credit risk

or strategic risk, these are all broad areas and actions can get involved in

but I suppose traditionally actuaries would tend to have a natural fit to more

of the financial services sector i.e. insurers whether it's life insurers,

general insurers, health insurers or even superannuation as well as the big banks as

well. Yeah so risk management is really interesting. So to me, it's interesting

also because you listen to the news and it's pretty much all over the news, every

single day. If you think about the Brexit, if you think about the Trump

campaign and all these election results and things like that, these are

geopolitical issues and they have a direct bearing of the financial economies

and the markers as well and so that's just one element of the risk management

side. If you think about all the latest issues around conduct risk, about risk

culture, these are all surfacing almost on a day to day basis on the news and

that's very relevant to everyone's day-to-day lives. The other side is on

cyber risk for instance, cyber risk you hear about cyber attacks, you hear about

IT systems and security systems being compromised pretty much again almost on

a daily basis and that's one element which is a growing area within the risk

management practice and you can think about from an insurance perspective how

do you protect yourself against all these cyber risk but also how to

actually create cyber insurance products so as to protect others against these

risks as well. So to me that a combination of the what's happening in

the real world but also utilising some of the actuarial skill sets that I've been

equipped with and combining the two and that creates a really viable and useful

value add to any insurer and to ultimately to the end customer as well. So APRA has

actually published a paper on risk culture recently, very much focusing on

what is important from a company's perspective and making sure that its

employees are actually behaving in the appropriate way even when nobody is

watching and that's one way of thinking about what the culture is. The other side is

that the APRA has also published a prudential standard about two years ago,

that is across a number of practice areas essentially focusing on the risk

management framework in entities and they've also focused a lot on the

responsibilities of the board who are ultimately looking after and need to

sign off on the risk management framework. That's from a

governance perspective, but there's also more live issues that are at play here.

If you think about the recent catastrophe such as the Cyclone Debbie in Northern

Queensland, that's all about catastrophe risks and that is very much bread and

butter of what actuaries do, at least for general insurance actuaries. We are

looking at the tail events, these are the high severity but low frequency events

and so it is about managing those catastrophe risk and with climate change

being more and more a hot topic these days the catastrophes risk is only going

to escalate over time. Cyber risk is another topic. With lots of digitisation

InsurTech, FinTech, pretty much floating around the news every day, no

wonder that there are a lot of vulnerable systems that could

potentially be compromised. So from a risk management perspective, this is a

very, very important issue that risk managers need to tackle and us as actuaries

can really make a useful impact in this particular area. It's about understanding

what insurers need to do to protect themselves against cyber risk, but it's

also about from an insurance perspective what cyber products they can issue so as

to protect different companies and to the end-user as well.

First of all, I would say keep being curious. Keep thinking about what is

actually happening. Times have gone whereby you can say you've graduated and

that's the end of your education. It's very much about continuous professional

development and it's about challenging yourself, about what you see

currently, what can be done better and from a risk management perspective

whenever you hear about news on geopolitical issues, about economic

issues, about financial issues or any other issues, have a think about what

would an actuary play in terms of the roles to actually address and help with

some of the issues. Number two I'd say make sure that you understand risk

management and actuarial is much more than just numbers. Numbers are just a

start and numbers are easy, it's the people

side the communication side that really needs to be at the forefront of your

development and that's what's going to make you stand out from the crowd and be

successful as an actuary. Thirdly what's important from a risk management

perspective is that it's important to think about risk management not just

from, a, these are the obstacles or these are the downside risk but also think about

what are the upside. So what are the opportunities that particular events,

particular products or particular ventures produce and that's where

strategic risks actually get very intermingled with the rest of this risk

management, it's about looking at both sides of the coin rather than just

saying these are the issues and we're only focused on the issues.