Actuarial thinking: Knowing when to avoid left turns
The actuarial control cycle was developed to ensure that actuaries remember to challenge their models as new data becomes available. Good actuaries are respected for their deep knowledge of how things work and their ability to model them. This merging of the real and statistical worlds to produce usable rules of thumb for non-actuaries is what makes good actuaries valuable.
While the best actuaries may have long been wrapping their statistical models with deep insights up front and simplifying communications at the back end, researchers have been developing those processes into fields all their own. What actuaries now need to consider is whether we need to learn from their research and incorporate the findings into professional actuarial work.
This article, published in the June/July issue of The Actuary magazine, explores when actuaries should use a heuristic or systems analysis method of decision making.
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Operational risk modeling framework
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