Expanding Horizons Issue 29, June 2004

Chatting with the Chair

By Mary Hardy, Education and Research Section Chair

 

Krzysztof Ostaszewski has done a great job of organizing sessions for both Spring Meetings in Anaheim and San Antonio.

You may have heard that the Society is reviewing its governance which is to say that the Board of Governors is considering, inter alia, the role of the sections and practice areas. The sections have been invited to step forward and have a more prominent, and possibly more structured, position in advising the Board or in taking responsibility for some areas of the Society's activities. This has given the Education and Research Section Council the opportunity to consider how we want our section to be positioned in the Society.

Currently, we are a section of actuaries with a common interest. We communicate within the section through Expanding Horizons and at the Annual Research Conference (at the University of Iowa this year hope to see you there!). Our only formal function with respect to relations outside the section is to sponsor and recruit sessions for the Annual and Spring Meetings of the Society. It is, perhaps, surprising that our involvement is so minimal, given that education and research are extremely important functions of the Society. For example, we have no formal contact with the Education and Examinations Committee, despite the fact that many of our members are professional educators. We have no formal contact with any of the Society's committees that review or oversee research. There is no standard mechanism for us to speak to the Board of Governors on any issue.

Last month the Section Council decided, nevertheless, to approach the Board of Governors on an issue that many of us feel passionate about; under the new examination system there appeared to be no place in the examined curriculum for modern financial mathematics or financial economics. The information filtering through on the new syllabus was that Black–Scholes might be covered in VEE corporate finance and that everything else would only be studied by investment or finance specialists at the fellowship level. This meant that the majority of students would probably not see the Black–Scholes formula and would almost certainly not learn about P and Q measures, or dynamic hedging or even what the no–arbitrage assumption really means.

The Section Council felt that this material was important for all actuaries to understand. Krzysztof Ostaszewski sent an e–mail to all members who have signed up to the Section listserv to get a feel for the membership view; this generated a great discussion, which supported the view that financial mathematics has become an essential part of the actuarial skill set. We then wrote a letter to the President, asking for our views to be put to the Board of Governors in their discussion of the 2005 curriculum.

We do not yet know the outcome of this discussion or whether our input was considered helpful. But in my personal opinion, the Society has an extraordinary resource in this section that could be much more fully utilized. We are ready and willing to do more.

Please let us know if there are other issues you would like us to take up, or other activities we might engage in. We would like the E&R Section to continue to communicate with and to serve the section members, as we try to develop our relationship with the Board of Govenors, the E&E Committee and the rest of the Society.