Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments
Publisher: In-Sight Publishing
Publisher Founding: March 1, 2014
Web Domain: http://www.in-sightpublishing.com
Location: Fort Langley, Township of Langley, British Columbia, Canada
Journal: In-Sight: Independent Interview-Based Journal
Journal Founding: August 2, 2012
Frequency: Three (3) Times Per Year
Review Status: Non-Peer-Reviewed
Access: Electronic/Digital & Open Access
Fees: None (Free)
Volume Numbering: 12
Issue Numbering: 3
Section: E
Theme Type: Idea
Theme Premise: “Outliers and Outsiders”
Theme Part: 31
Formal Sub-Theme: Actuarial Sciences
Individual Publication Date: August 1, 2024
Issue Publication Date: September 1, 2024
Author(s): Scott Douglas Jacobsen
Word Count: 765
Image Credits: Erik Haereid.
International Standard Serial Number (ISSN): 2369-6885
*Please see the footnotes, bibliography, and citations, after the publication.*
Abstract
Erik Haereid, born in 1963, grew up in Oslo, Norway. He studied mathematics, statistics and actuarial science at the University of Oslo in the 1980s and 90s, and is educated as an actuary. He has worked over thirty years as an actuary, in several insurance companies, as actuarial consultant, middle manager and broker. In addition, he has worked as an academic director (insurance) in a business school (BI). Now, he runs his own actuarial consulting company with two other actuaries. He is a former member of Mensa, and is a member of some high IQ societies (e.g., Olympiq, Glia, Generiq, VeNuS and WGD). He discusses: a risk assessment discipline; probabilistic risk assessments; professions are available for actuaries; dual-careers; and end an actuary’s official career.
Keywords: actuaries good at mathematics, actuarial professions and dual-careers, career-ending misconduct for actuaries, challenges with limited empirical data, classes and statistical basis, experience base and solid risk structures, little experience and risk assessment, most certain probabilistic risk assessments, professions for actuaries, structuring distributions with sufficient data.
Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments
Scott Douglas Jacobsen: Actuarial sciences as a risk assessment discipline can, ot some degree and in different sophisticated ways, predict the future. What areas of risk assessment/prediction are the fuzziest in spite of the relevant advanced qualifications and tools of an expert actuary?
Erik Haereid: In general, it applies to areas where you have little experience. One can theoretically imagine that one has little empirical data but a certainty or idea about the probability distribution, and in this way can determine a risk structure. For example, you don’t need to roll a die even once to determine that there is a 1/6 probability for each outcome; you know the distribution a priori. One could even say that if you know nothing about the outcome of a distribution, let’s say a roll of the dice, and decide the distribution based on a few rolls of the dice, then the distribution will probably be skewed compared to the correct distribution. I rolled a die 12 times and got the distribution P(1,2,3,4,5,6) = (0, 2/12, 4/12, 1/12, 2/12, 3/12), where the correct outcome is (2/12, 2/12, 2/12, 2/12, 2/12, 2/12). The next time I rolled the same die 12 times I got a completely different result. Anyone can try this in a computer program with random dice rolls. It illustrates well the problem of determining probability distributions, or risk structures if you like, with little empirical data. The more times you roll the dice, the closer you will get to the correct answer to the distribution; the law of large numbers. It applies to all empirical experiments and distributions; when you have enough data or trials you will always end up with the correct distribution.
If I can point to certain areas where the actuaries are struggling to get enough data? This was a bigger problem before the advent of the internet and computer technology. There are now many opportunities to obtain sufficient amounts of data in virtually any area of insurance. The question is rather how to structure the distribution. For example, it is a straightforward matter to create solid mortality tables distributed, for example, between men and women in an area with a stable, peaceful society. Naturally, there is the challenge of extended life caused by new improved lifestyles, technology and so on, but this can be built into the models as experience tariffs; the mortality tables are adjusted from year to year. One avoids promising a certain mortality over many years.
It is worse if you start by dividing into many classes, for example based on health, occupation etc. Then not only the political and moral aspects come into play, but also the statistical basis. The more classes, the less data per class.
Jacobsen: What areas can actuaries have the most certainty in their probabilistic risk assessments, where even entry-level actuaries can be confident in them?
Haereid: Again, I do not want to point to specific risk areas, but generalize it to say that where there is a large experience base, it is also easy to establish solid risk structures. This applies to many areas both in non-life, life and pension insurance.
Jacobsen: What professions are available for actuaries?
Haereid: After all, actuaries are often good at mathematics and statistics, as well as having a certain economic education and understanding. Professions where this is relevant will be able to suit actuaries, in addition to purely actuarial professions.
Jacobsen: Some people want to do dual-careers or switch careers. As time progresses, the easiest manner in which to do so, pick requiring similar skills and knowledge. What careers and professions are similar in expertise and knowledge to actuaries?
Haereid: I refer to the answer above. In addition, experienced actuaries will be able to develop both as academic directors and administrative managers in the insurance industry; in the consulting industry and in insurance companies. I myself have worked both as an academic and administrative manager in an insurance company and business school, before I went wholeheartedly as a consultant in my own company.
Jacobsen: What can end an actuary’s official career or have their memberships stripped from the relevant certifying bodies? Those various levels of professional penalties for known and evidenced misconduct.
Haereid: It takes quite a bit for that to happen; most often you get a reprimand or punishment if you make a mistake. But gross negligence can end a career. In that case, it is a matter of deliberately calculating incorrectly and to one or the other’s advantage.
Bibliography
None
Footnotes
None
Citations
American Medical Association (AMA 11th Edition): Jacobsen S. Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments. August 2024; 12(3). http://www.in-sightpublishing.com/actuarial-sciences-3
American Psychological Association (APA 7th Edition): Jacobsen, S. (2024, August 1). Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments. In-Sight Publishing. 12(3).
Brazilian National Standards (ABNT): JACOBSEN, S. Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments. In-Sight: Independent Interview-Based Journal, Fort Langley, v. 12, n. 3, 2024.
Chicago/Turabian, Author-Date (17th Edition): Jacobsen, Scott. 2024. “Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments.” In-Sight: Independent Interview-Based Journal 12, no. 3 (Summer). http://www.in-sightpublishing.com/actuarial-sciences-3.
Chicago/Turabian, Notes & Bibliography (17th Edition): Jacobsen, S “Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments.” In-Sight: Independent Interview-Based Journal 12, no. 3 (August 2024).http://www.in-sightpublishing.com/actuarial-sciences-3.
Harvard: Jacobsen, S. (2024) ‘Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments’, In-Sight: Independent Interview-Based Journal, 12(3). <http://www.in-sightpublishing.com/actuarial-sciences-3>.
Harvard (Australian): Jacobsen, S 2024, ‘Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments’, In-Sight: Independent Interview-Based Journal, vol. 12, no. 3, <http://www.in-sightpublishing.com/actuarial-sciences-3>.
Modern Language Association (MLA, 9th Edition): Jacobsen, Scott. “Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments.” In-Sight: Independent Interview-Based Journal, vo.12, no. 3, 2024, http://www.in-sightpublishing.com/actuarial-sciences-3.
Vancouver/ICMJE: Scott J. Actuarial Sciences 3: Erik Haereid, M.Sc., on Risk Assessments [Internet]. 2024 Aug; 12(3). Available from: http://www.in-sightpublishing.com/actuarial-sciences-3.
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