Carlos Arocha, FSA 2007
Arocha & Associates
Brief description of the type of work you currently do:
I founded my own consulting practice with the aim to provide cost-effective, creative, strategic actuarial and enterprise risk management consulting. We help our clients in the following areas:
- Support in the compliance with regulatory capital paradigms, such as Solvency II, Swiss Solvency Test (SST), and other solvency capital regimes
- Support in IFRS 17 processes and calculations
- Development, validation and testing of risk-based models
- Provision of Appointed Actuary services, under the Swiss Financial Market Supervisory Authority
- P&C reserving audits
- Optimization of reinsurance programs
- Delivery of quantitative risk modeling tools and data management systems
- Provision of Chief Risk Officer services on a consulting basis for companies not wanting to establish an internal role
Primary Area of Practice:
Risk Management, General Insurance
Other Areas of Practice/Interests:
Education & Research, Life Insurance
Why do you want to be on the Board?
I enjoy serving others. I am proud to belong to the actuarial profession and to the Society of Actuaries. The fact that more than 10 percent of the members actively volunteer, makes the SOA a wonderful organization, and I derive much satisfaction from my volunteering. Winston Churchill said, “We make a living by what we get; we make a life by what we give”, and to me that speaks of the grandeur of giving. With my international background, I can contribute with fresh perspectives to help make the SOA a global actuarial association, and maintain/improve the value of the credentials.
Ethics and Transparency
Ethics and transparency are essential to professional practice and service on the Board. How have you demonstrated ethics and transparency in the past? How will your own ethics and views on transparency influence your decisions and actions as a member of the SOA Board?
I have always acted with utmost honesty, integrity and competence, and in a manner to fulfill the profession’s responsibility to the public and to uphold the reputation of the actuarial profession. Before taking up any consulting assignment or perform a professional task, I consider what are the right actions in specific circumstances, and if the assignment in any way evades the Law, or is in any way detrimental to the reputation of the actuarial profession, I will turn it down. I consult the AAA Code of Professional Conduct from time to time, or whenever I have doubts about what the right action should be. I also check with peers, to gain another actuary’s perspective on a given situation. I act with the utmost transparency, disclosing all information when required to do so, and when such disclosure does not violate client privilege nor confidentiality. Decisions and actions that I will take as a Board member will be placed under my ethical and transparency framework. Consequently, my reputation as an actuary who has always practiced with honesty and integrity, will influence any decisions and actions that I take as Board member.
Collaborative working relationships are essential to the governance function of the SOA Board of Directors, especially as board members work with each other, volunteers, and staff to achieve the strategic goals and mission of SOA. Describe a situation from either your professional or volunteer experiences that demonstrated you are a team player
On one occasion, I led a team charged with developing an internal solvency model for a client. A young actuary who had been recently hired was very keen to join the team, and although her experience was somewhat limited, she was a good programmer, so I took a chance and invited her to join. For the calculation of market risk, unit fund prices of a certain fund that the client held in their asset portfolio were needed. The client didn’t have daily prices readily available, only monthly prices. So, my young actuary decided to call the fund manager on behalf of the client. The information leaked and the client was furious because they had not given us any authority to request fund prices on their behalf. The fund unit prices were not confidential or privileged information, but the fact that she had call the fund manager without prior permission from the client was inappropriate. I apologized with the client but did not mention the name of my actuary: I took blame as the project manager. Then I rolled up my sleeves to meet the project deadline. I organized a meeting with the team, discussed the incident, asked for feedback, and the team was up and running again. I never told anybody outside the team about the mishap nor pointed the finger at her. I spoke with the actuary, and while I applauded her drive and enthusiasm, I also asked her to be more careful the next time.
Board members need to exhibit curiosity and a desire to learn about areas that may potentially impact the SOA and the profession. How do you stay informed about what is going on nationally and internationally, and how do you apply that knowledge into your work with SOA and the profession?
I am a habits person, and as member of the L&D Section Council, I frequently write about this topic in The Stepping Stone, the section’s newsletter. I read or study on my subject one hour every day. One of my life mottos is “Don't judge each day by the harvest you reap, but by the seeds that you plant”—R. L. Stevenson. I read about developments in Solvency II, ORSA, IFRS, IAIS, Swiss Solvency Test and FINMA (i.e. Swiss regulator) news. I subscribe to various industry newsletters and magazines, and make every effort to keep abreast of insurance industry news. I am member of several LinkedIn groups. I attend and often speak at the following meetings: SOA Annual Meetings, Swiss Association of Actuaries Meetings, Casualty Actuaries of Europe Annual Meeting. I found speaking engagements particularly useful for expanding one’s understanding of a given topic. I have participated for 11 years in a row in the one-week Swiss Summer School organized by the Swiss Association of Actuaries and the University of Lausanne, and am currently attending a one-semester course on Quantitative Risk Management at the Swiss Institute of Technology. To complement my understanding of financial risk, I enjoy reading about macroeconomics, financial markets, and the causes and courses if the financial and economic crisis that began in 2007, including the impact and political developments in the Eurozone. As Board member, I will incorporate my understanding and insights of global solvency standards, macroeconomics, and financial risk management into any relevant discussions pertaining the research and educational activities of the SOA, particularly as they pertain to international issues.
Respectful and prudent use of resources is an important function of all board members. Explain how you have demonstrated this characteristic in either your work or volunteer experiences and how it will carry over to your role on the SOA Board.
I have always made prudent use of assets and resources of the organizations where I have worked, and of the committees where I have served. When it comes to spending, as business owner I have developed healthy spending habits, and when the times demanded it, I was quite frugal. I have always tried to minimize expenses, regardless of who is funding those expenses, including our clients. I spent more than 12 years working for a global reinsurer, and my job required heavy traveling. Sometimes I would get home just to spend the evening and fly the next morning to a new destination. I developed the habit of recording expenses at the end of each day on the road and this practice produced two good outcomes, namely, the ability to submit claim expense forms immediately after a trip, and conscious spending. I also thought of ways of reducing expenses, e.g. if it was possible to ride the subway in a city as opposed to hailing a taxi, I would do so. When managing budgets and other assets, I have carried out good, prudent stewardship. This prudence is tied to ethics and transparency values already discussed in the answer to question 2 of this questionnaire. At the SOA Board, being accustomed to protecting and being responsible for assets and resources, it will be very natural for me to carry on with this healthy practice.
Provide a brief description of your professional background and the type of work you currently do and explain how these experiences have prepared you for the Elected Board Member role.
I have nearly 30 years of international experience in reinsurance, quantitative risk modeling, ERM, and at various points in my career have been involved in product design & development, pension consulting, and financial reporting. I founded my own consulting practice in Zurich, Switzerland, where we help our clients in Europe and Latin America to:
- Prepare regulatory reports (e.g., Solvency II, Swiss Solvency Test, various Latin American solvency regimes) and support related processes
- Outsource Appointed Actuary services including the provision of statements of actuarial opinion
- Audit unpaid claim estimates and review general insurance reserving methodologies and techniques
- Develop risk appetite frameworks and methodologies to ensure that ALM conforms with the company’s overall enterprise risk management function
- Develop, test and validate internal models for insurance solvency assessment for both life and general insurance, ensuring the appropriateness of the methodologies and assumptions made in the calculation of technical provisions
- Develop methodologies to determine optimal risk retention levels of reinsurance programs
- Design and implement risk management structures, including the provision of actuarial services to captive reinsurance companies in Switzerland and Bermuda
- Implement both custom-made and third-party software solutions for data collection, storage and analysis, for use in discounted cash flow models (e.g., IFRS 17), risk models, and miscellaneous actuarial applications
- Maximize the potential of actuarial staff through the delivery of quantitative tools, modeling platforms, data management systems, and expert, tailored training
I have lived and worked in Mexico, the U.S., Canada, and for the past 20 years in Switzerland, and have provided consulting services to clients in more than 50 countries. I have assisted clients with the design and implementation of risk models, model validation and auditing, including second line of defense functions, and ORSA consulting, and have been recognized for excellence in executive level knowledge transfer in risk management.
Volunteer and Governance Experience
Describe how your previous volunteer, personal and governance experiences would strengthen your contributions to the SOA Board and organization.
- Past Secretary, Vice Chair, and Chair, International Section Council
- Past member, International Committee
- Secretary/Treasurer, Leadership & Development Section (third year)
- SOA Ambassador to Switzerland
- Coordinator of Regional Ambassadors, EMEA
- Member, Annual Meeting Committee (fourth year)
- International Section Newsletter
- Mentor, Actuaries Without Borders
My volunteering has helped me gain an understanding of the role of the actuary in different geographies. I have had opportunities to liaise with actuaries from Asia, Africa, Latin America, and Western, Central & Eastern Europe. As the SOA pursues an international strategy, I believe I can help strengthen relationships with actuarial associations worldwide. As Past Chair, I understood section and committee charters, to strengthen my governance expertise. My volunteering with the L&D Section allows me to promote and facilitate leadership, business, and personal skills development for section members. In the process, I am also learning how to be a good team player and to lead people and projects. I am a frequent author in The Stepping Stone, and the International Section News. In both sections I have also volunteer in the Annual Meeting Committee for three years in a row, which helps me work cross-section and with external speakers.