Book review: Risky Business

A common question for professionals, students or those with knowledge, is: ‘what does a professional do?’. My friends, colleagues, US immigration officials and non-executives all ask me this at one time or another. We tend to present our answers – ‘insurance figures’, ‘budgets’ etc – to move the conversation forward, but they are probably not good.

For those who are seriously interested, we have to go further, spending 10 minutes explaining how we use statistics and modeling to analyze and set important results for a specific situation. But have we answered that question? With this in mind, it’s a pleasure to read Catrin Townsend’s new book Risky Business: An Actuary’s Guide to Measuring and Managing Risk in Societywhich is a summary of actuarial work and its many dimensions.

The secretary calls Risky Business “a science fiction travel guide, covering history, wars, culture, what’s hot now and what’s emerging”. Although I am not a member of the target audience, I can say that it delivers on this short speech.

It is not a short book, but it is comprehensive and accessible now, for example, the chapter on the coronavirus model. I am interested in the degree, which deals with actuarial work in general and life insurance, pensions, pricing, finance, reserving and solvency in plain English. There are higher level readings, but they are only good enough to take the general reader to the end of A-level.

There’s not much in the way of investing that feels right; How the investment is used is more important to financial experts than the type of investment. According to the title of the book, there is little regulation of risk management in the world of Solvency II – but, again, this sounds right, noting that the focus is on what makes the actuarial profession face work.

Risky Business it also includes a chapter on the history of science, and discusses historical issues throughout. This is important, it shows how practical problems have been solved by experts and what that means for solving future problems.

Actuarial science has always been a practical discipline. I remember my pension book with a few lines about the importance of the value of the value, which I dismissed as a minor point; six months later, all I was doing was solving data problems. Risky Business it creates the practical life that scientists face. There is a chapter dedicated to data that covers not only data integrity and completeness, but also issues such as data ethics, General Data Protection Regulation, discrimination, wearables, machine learning, and more.

Who will read this book? As a sixth-grader or undergraduate considering an actuarial career, reading Risky Business it would have left me better informed. Its size is daunting, but for a young, persistent and mathematically minded person, it provides enough information to chew on and challenge, as well as a vision of the future of the actuarial profession. Location, level and depth will help inform those considering an actuary career.

Would this book be useful for non-managers? Its clarity and breadth can give curious non-experts working on boards an appreciation of professional expertise, engagement and areas where we may have an opinion but not exclusively. Such an understanding can lead to more appropriate challenges, and provide non-executive directors with insight into the issues that their advisors are addressing. I wouldn’t expect them to read the whole book, but it is organized so that chapters can be inserted as needed. The challenge will be to keep the top-notch material up-to-date.

Risky Business it didn’t resonate with me, but it was a great book and Townsend did a perfect job. I would comfortably recommend it to those interested in this work, either as professionals or because they have more than a passing interest in our work. For the rest, I guess I’m still saying ‘insurance mathematics’!

AUTHOR: Catherine Townsend

PUBLISHER: Palgrave Macmillan

SINGER: Paul Harwood, expert and risk manager

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