JFAR Risk Perspective 2021 – a must-read

person with reports

Richard Hartigan is an actuary in the Actuarial Policy Team at the Financial Reporting Council.

Here he tells us what’s inside the latest Risk Perspective document – and how there’s something for everyone.

The Joint Forum on Actuarial Regulation (JFAR) comprises the Institute and Faculty of Actuaries, the Financial Reporting Council, the Financial Conduct Authority, The Pensions Regulator and the Prudential Regulation Authority.

Initially formed in 2013, the JFAR recognises there’s a lot of commonality of interest among the five regulators in ensuring high-quality actuarial work.

To that end the JFAR has just released the annual JFAR Risk Perspective, setting out its collective view on current risks to high-quality actuarial work. The JFAR Risk Perspective 2021 is intended to raise awareness of the risks to, and the importance of, high-quality actuarial work in mitigating the risk to the public interest.

The dominant risks are climate-related risk (including biodiversity) and systemic risk (which encompasses Covid-19). The full list of risks is as follows:

  • Climate-related risk (including biodiversity)
  • Systemic risk
  • Ageing population and affordability
  • Unfair outcomes for individuals
  • Geopolitical, legislative, and regulatory risk
  • Technological change and competence in new areas
  • Impact of undue commercial pressure
  • Effective communication.

Want to know what’s happening in Climate-related risk in the regulatory world (not just the five actuarial regulators, but an alphabet of acronyms: CFRF, SFDR, NGFS)? … It’s all there in Section 4.1. After just seven pages you’ll be reeling off acronyms like a professional, and even more-importantly, understand how it all fits together.

Want to know what’s happening with respect to Covid-19? In Section 4.2 (Systemic risk) it’s all neatly summarised in just five pages with some superb web links for further research.

Mortality, Long Covid, mental health, triple lock … all these topics are covered in just seven pages in Section 4.3 (Ageing population and affordability).

Treating customers fairly remains a bedrock of UK regulation: discover all the latest in Section 4.4 (Unfair outcomes for individuals) and in seven pages you’ll be up-to-date with all the regulators’ thinking on this important topic.

There is an incredible amount of change in actuarial regulation and legislation more generally. It is genuinely hard to keep up with it all … in seven pages in Section 4.5 (Geopolitical, legislative, and regulatory risk) you can get up to date on the latest developments.

Machine learning, big data, artificial intelligence … it’s exciting stuff but it’s moving quickly (especially the ‘ethics’). Section 4.6 (Technological change and competence in new areas) covers it all in four pages.

We all understand the organisational pressure sometimes to make the right commercial decision … in Section 4.7 (Impact of undue commercial pressure) you’ll learn how to recognise it, how to resist it, and where to turn to if you require assistance. This is an area of growing regulator interest, and in four pages you’ll get up to speed on an important topic, personally, for each-and-every actuary.

Section 4.8 (Effective communication) covers a topic of critical importance in four pages. Actuaries have come a long way when it comes to presenting and communicating, but I think it’s fair to say we still have some way to go until we (collectively) shake off our negative image as poor communicators. We all have a lot to say – let’s make sure we get it right.

As you can see – no section is longer than seven pages – it’s all presented in bite-size chunks. There’s even a few graphics! For the really keen there are 265 web links for further research. It all counts as CPD and should be great material for your reflective practice discussion. This really is a must-read for every actuary.