Looking Ahead: Discrimination, Artificial Intelligence, Pandemics, Climate Risks (and a Call for Papers)
By Andreas Tsanakas
Expanding Horizons, April 2022
Actuarial work has always been about both technical skills and the upholding of professional standards. It follows that the challenges, old and new, to our profession are often at the interface of those two facets of actuarial work. These themes are explored in recent guest editorials and targeted special issues published in the Annals of Actuarial Science (AAS).
Questions of discrimination and how to respond to it have preoccupied many of us over recent years. Dolman, Frees and Huang focus on insurance discrimination in underwriting/pricing and posit that, given its complexity as a social and economic phenomenon, interdisciplinary understandings of discrimination are necessary in order to design robust (e.g., regulatory) responses.[1] For example, to assess whether differences in prices across demographic groups are ethically acceptable requires a review of social and economic principles, an examination of regulatory and legal frameworks across jurisdictions and business sectors, and insights from the flourishing machine learning (ML) literature on the topic.
While concerns about discrimination preceded (and are certainly not specific to) the big data revolution, they have intensified in recent years and found a broad reach—with terms such as “algorithmic bias” finding their way into common speech. Maynard et al take stock of challenges posed by the enormous strides of artificial intelligence (AI) models and their industry deployment, from discrimination to issues of privacy and explainability.[2] The authors succinctly explore the extent to which the great successes of AI/ML also bring substantial dangers. They conclude that "there are core ethical concerns that will need to be balanced against the gains of more bespoke and personalised digital experience and the hope of greater financial inclusion," highlighting the important role of regulation and process auditability.
What lies ahead? The COVID-19 pandemic has once again brought actuaries to the forefront, not just as risk modellers but also as responsible risk communicators. The AAS is planning to publish a special issue on mortality shocks within 2022, bringing together technical insights from our community, responding to (but also thinking beyond) this still-unfolding crisis. The issue is edited by Michel Dacorogna (University of Zurich), Runhuan Feng (University of Illinois) and Annamaria Olivieri (University of Parma).
In a sense, the COVID-19 pandemic is a dress rehearsal for probably the greatest of our Anthropocene crises: the climate emergency. The insurance sector has an important and multifaceted role to play in this, and we are proud to announce a call for papers for a special issue on “Managing Climate-related Risks” in AAS. The special issue aims to capture leading interdisciplinary thinking with clear relevance to actuarial problems in pensions and insurance. It will be edited by Mathieu Boudreault (Université du Québec à Montréal), Iain Clacher (University of Leeds, and UK Centre for Greening Finance and Investment) and Rui Zhou (University of Melbourne). We are looking forward to the thought leadership our community can provide! Submissions are currently open and will close on June 30, 2022 – for more information see the call for papers.
Andreas Tsanakas is Professor of Risk Management at Bayes Business School, and editor-in-chief of the Annals of Actuarial Science. He can be reached at TsanakasAAS@gmail.com.