Through 40 years of practice as a consulting actuary I have had the distinct honor to work with many different entrepreneurs and intrapreneurs. An entrepreneur is defined as a person who organizes and operates a business, taking on greater than normal financial risks in order to do so. An intrapreneur is defined as a manager within a company who promotes innovative product development and marketing. I love working for both as their consulting actuary.
As a consulting actuary I am naturally reactive, rather than proactive. I want to be a member of my client’s team, striving to achieve the team’s objectives. I’m most comfortable when those objectives are clearly defined and communicated. My best clients are always unrealistic, at least to some extent. Their goals and objectives are often a stretch, and sometimes require some good luck along the way. If I believe the stated goals are impossible to achieve I will certainly say so. However, if the stated goals are possible, but difficult, I will generally sign on and do my best to help.
How can entrepreneurs and intrapreneurs make the best use of a consulting actuary? First, the consulting actuary can contribute knowledge of mistakes that others have made in the past. Someone once said that a smart person learns from their own mistakes, but a brilliant person learns from the mistakes of others. A consulting actuary can provide some help to make his or her client brilliant.
Second, the consulting actuary can provide projections of results under alternative strategies and assumptions for future experience. Financial projections are more critical than ever. Fortunately, ever-improving computing power makes them easier to prepare than ever. One thing to avoid, however, is projection bias. Some actuaries always tend to be pessimistic in their projections, while others always tend to be optimistic. The projections need to be “just right”, and as objective as possible.
Finally, the consulting actuary can contribute as a visible member of the team. Most programs are going to require the support of insurance companies, reinsurance companies, regulators, rating agencies, auditors, and a wide variety of other players. When a consulting actuary is on the team the information presented to third parties can have greater credibility. He or she can also be available to answer the inevitable questions, many of which may be coming from actuaries on the other side of the table.
I’ve been blessed by many terrific working relationships with entrepreneurs and intrapreneurs. With all of the experiences of the last 40 years, I’m expecting the future working relationships to be even better.