Strengthening The Role of Academia
Strengthening The Role of Academia
By Emily Kessler
The SOA has a plan to enhance the role of the academic branch of the profession. Read on for all the details.
At its October 2008 meeting, the SOA Board of Directors adopted a plan to strengthen the role of the academic branch of the profession by establishing a program to name Centers of Actuarial Excellence and to offer a program to encourage students to pursue both an actuarial designation and a Ph.D. by offering stipends. This initiative to strengthen the role of the academic branch (the role of academia) is one of the first initiatives under the revised SOA Strategic Plan (2008–2012).
WHY STRENGTHEN THE ACADEMIC BRANCH?
The revised Strategic Plan highlights the role of the SOA in developing knowledge. Under the plan's theme, it lists two goals: to "produce and support research that expands the boundaries of actuarial science" and to "promote the development of intellectual capital and identify opportunities for its application." In the discussions surrounding the development of the Strategic Plan, SOA leadership identified that strengthening the role of academics within the actuarial profession has the potential to enhance research and intellectual capital development. We looked at what other professions—law, accounting, medicine, finance—were able to gain from their academic branch, and felt that a strong academic branch within the actuarial profession could provide the same benefits. The academic branch can help the profession grow stronger, and play an integral role in advancing our knowledge.
Within most professions, academia plays several roles. The first is to educate future members of the profession. The second is to develop intellectual content. The third role, which will grow out of the education and research roles, is to give back to the community (society) and the profession. Generally these three roles are supported through the university system, and the university system relies on all three to sustain itself (education, research, professional/community support). When any one piece is missing, the academic foundation is weakened. Quite simply, education, research and professional/community support are the air, water and food of a university–based system. Take away one of these roles and the system may be able to survive, but it certainly won't thrive.
Strengthening the role of academia could be seen as a chicken and egg dilemma: does the profession proactively strengthen the role of academia by giving it a larger role, or do we wait to give it a larger role until we see stronger results? Historically, the profession has chosen the second route. Our perception has been that we have survived, and some would argue thrived, without a strong academic foundation. Unlike most professions, we have successfully educated generations of actuaries through the exam system. Moreover, historically, the type of research the profession needed to grow stronger was either supported by business (research departments of large mutual insurance companies) or was able to be produced by a limited range of academics and actuaries who were interested in these developments.
Today, we know that employers demand much more of actuaries. We know that actuaries are challenged in traditional roles, and our role and expertise in certain areas of practice is being challenged by other professions. We are also working to define our value proposition in enterprise risk management. To address these issues, the Board decided that the SOA needed to proactively strengthen the academic foundation of the profession. The support that the profession can give to academia will strengthen the academic foundation, which in turn will strengthen the profession.
WHAT DO WE WANT TO ACHIEVE?
As we began to develop potential programs, the Board considered what specific action steps it wanted to consider in developing an implementation plan. The Board prioritized the goals and identified the following as the top goals for the program:
- Facilitate academic research which advances the profession.
- Foster tighter relationships between academia and business community.
- Grow more actuarial Ph.D.s.
- Create/support centers of excellence in research and/or education.
The Board also outlined what it did not want to do. Most significantly, it determined that it did not want to create a parallel path for credentials (academic route). At this time, there is no intent for the SOA to move the process of credentialing actuaries out of an examination–based system to a university–based system.
In the summer of 2008, volunteer leadership within the SOA surveyed members of the academic community on how to best achieve some of these goals. Specifically, it focused on how best to create Centers of Actuarial Excellence and how to create more Ph.D. actuaries. At the October meeting, the Board adopted programs to create Centers of Actuarial Excellence and to establish Ph.D. stipends.
CENTERS OF ACTUARIAL EXCELLENCE
The SOA will open a program in the summer of 2009 to establish Centers of Actuarial Excellence (CAE). A school would be designated a CAE if it met the following criteria:
- Offer a program with an identifiable degree or track in actuarial science.
- Provide a curriculum with approved courses in all Validation by Educational Experience (VEE) subjects and which covers most of the material in at least four of the five preliminary examinations (currently P/1, FM/2, MFE/3F, MLC, and C).
- Produce an average of 10 graduates per year.
- Produce high quality graduates who are in demand by employers.
- Offer a curriculum that integrates with other relevant fields, particularly those developing business acumen and communication.
- Have responsible faculty of sufficient quantity and quality (with at least one actuary on faculty).
- Connect to industry (e.g., advisory board, campus speakers).
- Produce research and other scholarship.
SOA volunteers will use these eight criteria, in conjunction with site visits, to determine which schools will be named a CAE. The Board recognizes that most programs, including many good programs, won't meet all of these criteria. These criteria are set at a reasonably high level to recognize those programs that are truly excellent. The hope is that schools that are close to meeting the criteria will have the incentive to strengthen their programs and become a CAE.
Schools that are designated a CAE would be eligible for grants in education and research. These are significant grants; they are intended to be multi–year grants in the $50,000 – $100,000 per annum range. The goal is to allow the universities to make significant investments in their programs, their research and the profession. Education grants could be used to improve curriculum or develop or strengthen a Ph.D. program (among other purposes). The SOA would designate topics for research each year and ask for proposals from schools for their best research projects in that area (e.g., ERM, future of retirement, future of health systems). Schools could either apply for those research grants or submit a research proposal of their own. The Board is targeting two multi–year grants awarded each year.
SOA volunteers are currently developing more detail around the criteria and process for a school to be designated a CAE. SOA volunteers are also developing the final Ph.D. Stipend program. The SOA is going back to program directors of schools that are listed on our Web site to gather more information and feedback about the CAE criteria and process. The program will open in summer 2009 and we'll announce the first CAE in December 2009. The first CAE grants will be awarded in early 2010.
Ph.D.s are the heart of any academic community. The deep knowledge and understanding of a field that a Ph.D. acquires helps many professions blend the best of the theory with the needs of practice. Actuarial science already combines the best of mathematics, statistics, finance, economics, demography, risk management and many other disciplines. It is important that those who work within those disciplines understand the practical needs that actuaries have. One way to do that is to make sure Ph.D.s who are educating actuaries and performing research that supports the actuarial community hold an actuarial designation. We know today that one barrier to strong research and education in university settings is the lack of an adequate supply of Ph.D. actuaries.
In response, the Board is establishing a program to provide stipends for students pursuing both a Ph.D. and an actuarial designation. We asked actuarial program directors, members of the Education and Research Section and other academics what programs they thought would best encourage more students to pursue an actuarial credential along with their Ph.D. (and more actuaries to pursue a Ph.D.). They indicated that providing Ph.D. stipends would be the most attractive program.
Exact details of the program are to be developed, but stipend levels will be around $20,000 per annum, to be used for tuition, living expenses, fees and other costs related to the pursuit of the Ph.D. The student could be pursuing a Ph.D. in actuarial science or other relevant fields (e.g., mathematics, statistics, economics, risk management). The student must pursue or hold an actuarial credential. The stipend will be automatically renewable, as long as the student continues to make good progress in both the Ph.D. and the actuarial credential. Volunteer leadership at the SOA will be working to develop the details of this program for the Board to approve in January 2009. The SOA will open the program for applications shortly thereafter; the SOA hopes to award the first Ph.D. stipends for the 2009–2010 academic year.
This program will work in conjunction with other programs to develop more Ph.D. actuaries. In October the Board approved a separate program to reimburse graduate students and faculty members for successful completion of exams or modules. This program is intended to help defray the cost of exam completion for those future members; graduate students and faculty members don't have access to the funding for exam fees that many students at private employers receive. We believe that providing this support to defray the costs of examinations and e–learning will work in tandem with the Ph.D. Stipend program to encourage the development of more actuaries holding Ph.D.s.
In addition to the launch of the CAE and Ph.D. Stipend programs, the Board will continue to support other initiatives to strengthen actuarial academic programs. The Board understands that one barrier for many schools in achieving CAE status is the lack of sufficient faculty. Faculty who hold an actuarial designation are expensive, and schools may not have the budget to hire actuaries. The SOA Board recognizes this barrier and will be considering if and how the SOA might support schools in hiring faculty. Finally, we still want to explore the possibility of establishing business/academic partnerships. The SOA role in this effort would be to facilitate these partnerships. More background work must be done, including conversations with the business and academic communities about how best to facilitate these partnerships. Additional work and exploration will continue in 2009.
The Board is excited to be taking steps to strengthen the academic base of the profession. The Board believes this initiative strongly supports the Develop Knowledge theme within the new Strategic Plan. Strengthening the academic base will help develop the research and intellectual capital that actuaries need to maintain their competitive advantage in traditional fields and continue to broaden the profession's horizons.
Emily Kessler, FSA, EA, MAAA, FCA, is senior fellow, Intellectual Capital, at the Society of Actuaries. She can be contacted at email@example.com.