When Actuaries Must Rethink Their Approach

In the world of actuarial science, there’s often a strong reliance on tried-and-true methods. Though we often are accused of overthinking things, once decisions are made and models developed, how often do we step back and rethink them?

The tools and approaches that serve us well over the years provide a sense of stability and reliability in a field that thrives on precision. However, what happens when the external environment shifts unexpectedly, or when the assumptions underpinning our models no longer hold true?

A Scramble to Respond

This past summer, some healthcare actuaries found themselves on a wild ride when the Centers for Medicare & Medicaid Services (CMS) made an announcement that resulted in a mad dash to make revisions to submitted Medicare Advantage (MA) bids.

Actuaries had to quickly rethink their assumptions, update their models, and collaborate closely with their teams to meet the new submission deadlines. Many found themselves scrambling to adapt their established methodologies to the new requirements, demonstrating the importance of flexibility and the ability to pivot quickly in response to external pressures. There was a clear need to adapt and rethink prior work.

Being able to quickly pivot in response to new information or external pressures is crucial for success as an actuary.

Comfort in the Known

But we don't always have such clear-cut external pressures that will force us to rethink our assumptions, our models, or our methods. How often do we hear (or say) the phrase, "This is the way we’ve always done it"?

We tend to get comfortable with something that seems to work well. Yet clinging to "the way we've always done it" can prevent us from seeing new opportunities or responding to more subtle shifts.

With policy changes happening very frequently, introductions of new technologies such as AI, and the sheer amount of additional data and tools at our disposal, the world is a new place almost every day.

Sticking too closely to familiar tools and methods can be limiting, especially when we pay less attention to the changes occurring around us due to our current comfort.

Opportunities to Adapt

For actuaries, this means recognizing when it’s time to challenge the status quo. Whether it’s due to a policy change, economic shifts, or the availability of new data or tools, adaptability is key.

The most successful actuaries aren’t just experts in their field—they’re also open to rethinking approaches and innovating where necessary.

When you start hearing yourself or your team say, "This is the way we’ve always done it," take it as a signal. It might be time to step back, take a fresh look, and adapt to new truths around you.

As actuaries, we can combine deep knowledge with a willingness to consider new approaches and challenge existing assumptions.

Deeper Dive

For those interested in exploring these ideas further, I recommend an insightful episode from the "Cautionary Tales with Tim Harford" podcast, featuring Adam Grant. This episode delves into the dangers of rigid thinking and the importance of adaptability, offering valuable lessons for anyone in a decision-making role.

The episode discusses how professionals and organizations can fall into the trap of sticking to familiar methods, even when the environment around them is changing. Adam Grant, known for his book "Think Again," provides insights on how to cultivate a mindset that is open to rethinking and adapting in the face of new challenges.

It also convinced me that I would never have been a successful fire-jumper.

Lab Work

Set aside time to reflect on your current methods and explore new tools and strategies that might add value today.

• Identify the tools, models, or approaches you rely on most in your work. When was the last time these were challenged or updated? Are there areas where you might be sticking to the familiar simply because it’s comfortable?
• Consider the situations that might prompt you to rethink your approach in that situation. What external change, such as a new policy or economic shift would require you to make a change? Or is there something internal, such as access to new data, a new tool, or a fresh perspective from a colleague that could be a trigger for you to adapt?
• Make a plan to revisit and adapt at least one of your current methods or models. Identify what you need to research, who you need to involve, and how you can test a new approach.

By embracing adaptability and remaining open to new ideas and methods, you can ensure that your actuarial work and career is resilient, innovative, and equipped to handle whatever challenges come your way. You can also develop the ability to notice when it is time to rethink or adapt, which puts you in more control when the inevitable changes come knocking.

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Hi, I'm Aree, a sustainable success speaker, author, coach and seasoned actuary. Throughout my healthcare actuarial career, I developed my passion for team-building and mentorship. Now, I've turned that passion into a mission: to empower actuaries and analytical professionals to navigate their complex fields with clarity and purpose. By providing tools, insights, and as a partner, I help individuals build sustainable, fulfilling careers that truly align with their values and aspirations, and help leaders build effective and cohesive teams.

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