actuarial lessons - wood carving
Actuarial Study, Learning, Misc, Productivity, Psychology

5 Actuarial Lessons From Carving Wood

My biggest goal in life right now is bringing my 3 kids up to be well rounded, healthy and happy adults.

It's the most important responsibility I'll ever have. 

As a parent, I want them to take onboard some hard earned wisdom and lessons from my 44 years of experience and to learn from my many mistakes.

Of course they will have to eventually find their own way, but I still think it's important for me to, where possible, soften the road ahead.

One of my greatest joys is family time spent together down in what we now call "ProActuary HQ."

It's a little secluded cabin set deep in the Northern Irish countryside. 

actuarial lessons - path

We go there to generally chill out.

To get away from the hustle and bustle and to spend lots of time outside, away from digital distractions (unless I'm there to work on ProActuary!).

This means doing random things. A stochastic approach to life. No set agenda. No timescales. No goals. Just whatever takes our fancy.

Usually this involves activities such as building huts, a stone BBQ or forest paths. Another day it could be painting rocks, planting trees or tending to our vegetable patch. 

The common theme is doing physical stuff that makes us feel grounded again. A perfect antidote to too many hours during the week spent indoors and staring at screens.

There’s something very satisfying about making physical things.

I think we don't do enough of it these days.

Wood is my favourite material.

Chopping, sawing and carving.

It’s very therapeutic.

Instead, most of us nowadays move numbers and words around on a screen, pressing buttons on a keyboard and solving problems using binary bits and pixels.

As actuaries, we are so used to computers, smartphones, technology and working with these tools day in day out. I sometimes wonder what the blacksmith, carpenter, or weaver from 200 years ago would think if they time travelled forward to 2022.

actuarial lessons - wood carving

It seems we increasingly live in a life of crazy technology and immediate everything - always being on, with an expected tempo of doing things as fast as possible.

I find doing real physical things like building and carving with wood, with slowness and deliberation, brings me balance.

Last weekend we opted to do some more wood carving.

Crafting a wooden spoon was the challenge of the day.

My son, Joshua, was keen to see the spoon making process from start to finish. This wasn't just an opportunity for some quality father-son bonding. It was also a chance for some of that 'fatherly wisdom' to be passed along! It turns out the lessons we learnt in our little afternoon of spoon carving, were applicable to life in general.

And even pertinent to actuaries....

Actuarial Lesson #1: Start With a Clear Vision

actuarial lessons - log split

Wooden spoon carving, step 1: Selecting your piece of wood. 

It's important to get this right.

Poisonous is clearly not good. Neither is too soft, too hard, too long or short.

As I explained to little Josh, you need to see the finished spoon in the branch before you even begin. It's all about being able to envision in your mind what you cannot yet see with your eyes.

There's magic in carving wood. I've found it calms the 'monkey mind' and enriches the soul through mindfulness, creativity and connection.

In fact carving wood is a lot like sculpting stone.

I saw the angel in the marble and carved until I set him free."

- Michelangelo

But, how does all this apply to actuaries?

Well, let's consider the actuarial student embarking on actuarial exams with an end goal of becoming a qualified actuary.

The trainee actuary is starting a long difficult journey that will likely test his/her mental fortitude to the extreme.

Beginning with the end in mind (passing all actuarial exams to become a qualified actuary), with a clear vision at the outset, is like creating a mental map to follow in the same way a builder follows a blueprint.

I like how Dr Stephen R. Covey thinks about this.

Things tend to go through two stages of creation. 

First there is the mental creation, then there is the second creation - the physical one. 

Having a clear vision puts the goal into focus and smoothens the road towards the physical creation through motivation, resilience and setting a strong foundation to begin with.

People are working harder than ever, but because they lack clarity and vision, they aren't getting very far. They, in essence, are pushing a rope with all their might."

- Dr Stephen R. Covey

Actuarial Lesson #2: Leverage

Give me a lever long enough and I shall move the world"

- Archimedes

Leverage is all about achieving more with less. We all have limited time and resources, so generally the more we can apply leverage to help us in our life, the better.

Tools are one of the best leverages available to us and, as I explained to my son, it was important that we began our little project with the right tools at hand. 

For us, this included a saw, an axe, a straight knife, a hook knife and some sand paper to finish off the spoon.

In the actuarial world we tend to think of leverage in terms of financial borrowing or gearing. But there are many different ways for actuaries to achieve leverage in life besides increased debt (which of course also increases risk).

Some leverages available to actuarial students include things such as:

  • Study tools such as a study calendar and the pomodoro technique.
  • Study techniques such as mind mapping and spaced repetition.
  • Technology to help (e.g. apps or software for mind mapping and flashcards).
  • The best actuarial study books and tutorials.
  • A supportive family, friends and employer.
  • A mentor to go to for advice.
  • A clear vision for motivation and focus.

At the very start of your actuarial study, or other actuarial and non-actuarial endeavours, I truly recommend you ask yourself what ways you can work smarter and achieve large impacts via small focused changes.

As a famous insurance tycoon once said:

Big doors swing on little hinges"

- Clement Stone

Actuarial Lesson #3: Learning Through Failure

Things were going well.

We were both very happy with the general shape, the handle proportions and how the carving was progressing. 

But then, just like life has a habit of doing to us, disaster struck!

As I carved carefully with my hook knife into the bowl, I didn't realise how deep I had gone and ended up going through the bottom creating a hole.

Owning a spoon with a hole is like having a motorbike with an ashtray - not ideal!

Josh was devastated. His vision of eating his cornflakes later that evening via a proudly carved new utensil had taken a major blow.

"Can't we fix it?" he asked.

"Unfortunately not, son." I replied.

"But it's okay. This spoon, with it's unfortunate hole, can be kept as a constant reminder of a very important lesson for life."

"What's that?" he wanted to know.

"I'm glad you asked"....

...Back to actuaries:

I'd love to say the road to actuarial qualification is paved with gold.

But it's not.

Instead, the road is typically paved with a lot of frustration, tears and probably some failure.

Everyone has a plan until they get punched in the mouth."

- Mike Tyson

But failure is often a gift in disguise. It teaches us lots of valuable lessons.

For example:

  • Failure builds character, particularly resilience.
  • Failure builds creativity. When we fail we intuitively analyse the situation in terms of what went wrong and why. This forces us to creatively evaluate how we can improve and hence builds our creative problem solving abilities. As actuaries are problem solvers at heart, this is an important attribute to develop.
  • Failure makes us wiser and stronger and ready to face the future, often with more compassion.

I also believe that experiencing failure not only reminds us that we are human (despite the actuary robot jokes!), but helps us to be able to take more appropriate risks in our lives and career.

I'm definitely not saying we should be reckless, but thinking about the risk and return relationship, if we are overly cautious, and afraid of risk, we can miss out on some big opportunities in life.

Failing and learning to be okay with it, teaches us to accept risk and failure as part of the journey and to be okay with undertaking "smart risks" where appropriate.

I agree with JK Rowling that one of the greatest risks in life can be not taking any risks at all:

It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all – in which case, you fail by default."

- JK Rowling

Actuarial Lesson #4: Margins of Safety

Carving wood, using a hook knife, is quite addictive in a strange way.

It's difficult work, but as you peel away the layers of wood and start to see the mental image emerge into the physical realm, it's difficult to stop.  

I succumbed to this addiction which ultimately led to the aforementioned tragedy of the unintended hole. Basically I wanted to get a nice deep spoon and I erred too close to the bottom edge as I feverishly scraped and carved.

As I explained to Joshua, what I should have done was given myself a better margin of safety.

Actuaries, of course, are well versed in margins. We operate in a world of comparing assets to liabilities and calculating the margin available under different sets of assumptions.

But margins of safety extend to other parts of an actuary's life. We need them to absorb errors and soak up the inevitable strokes of bad luck.

Some more actuarial examples:

  • When quoting a budget for a client, make some allowance for unexpected expenses.
  • When relaying a timescale for a senior actuarial manager, factor in a buffer. It's better to under promise and over deliver than over promising and under delivering.
  • When studying for an actuarial exam, aim to get through your notes a few days in advance.

Actuarial Lesson #5: Don't Forget to Celebrate!

So many people forget this part, but it's super important.

Celebrating and rewarding yourself for all your hard work is not only fun, but also key to building good habits, which are foundational to success in life.

BJ Fogg is a habit expert. Through his book, Tiny Habits, he teaches what he refers to as the ABC of habit formation.

Good habits, Fogg tells us, incorporate 3 important components: Anchor + Behavior + Celebration

He describes these as follows:

1. ANCHOR MOMENT
An existing routine (like brushing your teeth) or an event that happens (like a phone ringing). The Anchor Moment reminds you to do the new Tiny Behavior.

2. NEW TINY BEHAVIOR
A simple version of the new habit you want, such as flossing one tooth or doing two push-ups. You do the Tiny Behavior immediately after the Anchor Moment.

3. INSTANT CELEBRATION
Something you do to create positive emotions, such as saying, ‘I did a good job!’ You celebrate immediately after doing the new Tiny Behavior.”

Fogg goes on to emphasise the importance of the celebration aspect:

Celebration will one day be ranked alongside mindfulness and gratitude as daily practices that contribute most to our overall happiness and well-being. If you learn just one thing from my entire book, I hope it’s this: Celebrate your tiny successes. This one small shift in your life can have a massive impact even when you feel there is no way up or out of your situation. Celebration can be your lifeline.”

So as you move through your actuarial career, passing actuarial exams, qualifying as an actuary or getting an actuarial promotion, make sure to remember the importance of celebration.

For me, that was the satisfaction of seeing the finished (second!) spoon and a cold beer by the evening fire. For Joshua, it was the most satisfying bowl of cornflakes he had ever had! 

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actuarial lessons
Learning, Misc, Psychology

37 Lessons Actuarial Science Has Taught Me About Life

  1. Compound interest is powerful. Start saving early.
  2. Life is a series of likelihoods. Thinking in a probabilistic way will serve you well. 
  3. Risk is unavoidable. To succeed, you must learn to embrace it.
  4. Much of life is random. But thanks to the law of large numbers, doing something enough times can help you create your own luck.
  5. Salary is important, but meaningful work trumps your wage. 
  6. Focus on the things you can control. Let go of the things you can’t. 
  7. Don’t be afraid of uncertainty. A stochastic life is full of colour. 
  8. The self-help gurus that preach you can have it all in life are wrong. There’s an opportunity cost with every venture we embark on. 
  9. Be careful what advice you follow. Question everything. 
  10. The biggest risk in life is playing it too safe. 
  11. Take active control of your life. The proactive stallion beats the reactive rocking horse. 
  12. There are an infinite number of ways to perceive events. Don’t attach 100% probability to your initial interpretation.
  13. Don’t burn bridges. It’s better, in the long term, to stay cool and bite your tongue. 
  14. Don’t be tempted to chase money to the detriment of character. It nearly always turns out bad.
  15. Move. Sitting at a desk all day is bad.
  16. Health, family and friends come first. Work and study are important but not what life is about. 
  17. Beating procrastination is a daily battle. Nike’s mantra of “Just Do It” is a great antidote. 
  18. Things like smoking, being male, poor diet, lack of exercise and and stress equates to a lower expected lifetime. But that’s on average.
  19. Vilfredo Pareto was right. 80% of your success tends to come from 20% of your efforts.
  20. Not all “experts” are created equal. Letters and credentials doesn’t equate to omniscience. 
  21. Learn to say no, when appropriate. Everyone has an agenda. What’s best for you may not be on it.
  22. 90% right and done beats 100% right but unfinished.
  23. Lower your expectations. Happiness = Outcome/Expectations.
  24. Think long term. Particularly with regard to spending and health. The 1973 Stanford study kid who ate the marshmallow is now broke and obese.
  25. What looks like overnight success usually takes years of work.
  26. Consider your circle of friends as a state in a Markov chain. Guard transitions into the “circle of influence” state carefully.
  27. Thinking optimally and rationally, without bias, is a valuable skill. But surprisingly difficult to master.
  28. Failure in life is inevitable (e.g. actuarial exams!). But that’s not what counts. Getting up and readjusting your path is what is important.
  29. Never stop learning. For a successful actuarial career, exams are only the beginning.
  30. Never take the lift when there are stairs to climb. Small habits make a difference.
  31. Be careful with technology, especially addictive smartphones and social media. We are living in a grand-scale social experiment. 
  32. Challenge your comfort zone. But don’t forget to rest.
  33. Time spent with family, especially your kids, is much more important than achieving any work accolades.
  34. Always question the assumptions you make in life. We make faulty assumptions more often than we realise.
  35. Mistakes happen. Ask yourself “will this matter/will anyone care in 5 years time?”
  36. It’s better to choose the pain of discipline (e.g. studying) over the pain of regret (e.g. failing exams).
  37. As a 41-year-old I probably have about 500 months of my life left to live. Stay conscious of that every day.
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data science - future of actuarial profession
Data Science, Insurtech, Learning, Misc

6 Thoughts on Future Strategies for the Actuarial Profession

I was recently contacted by another actuary – an IFoA council member – asking for my thoughts on strategies the IFoA should think about for the future.

I thought I’d share my response on here, and would love to hear what other actuaries think:

“…. Like many other professions, I truly believe that our profession is facing a critical time given the pace of change.

So what can the actuarial profession do to remain relevant well into the future? Here are a few of my personal thoughts:

1. Perpetual Learning

Going forward, I think, there needs to be a greater focus on “on demand learning/upskilling” and accessibility to resources as and when needed for learning on the job. Eg understanding and applying artificial intelligence, machine learning, blockchain, IoT, wearables, dealing with new emerging risks. The list goes on and is constantly evolving. I think the profession can and should continue to play a role in continuous ongoing learning after qualification. It increasingly seems that qualification is only the beginning and we need to be constantly learning and evolving as actuaries, to avoid getting left behind. Learning to learn and being flexible and having an ability to reinvent oneself are critical skills for the future. I believe the profession can help us stay nimble as well as fostering a culture of continuous ongoing lifelong learning. Otherwise, I believe, others (eg “data scientists”) that often have the more flexible mindset may continue to make inroads into traditional actuarial areas (eg pricing).

2. Innovation & Creativity

I would like to see a greater focus on innovation and creativity as well as more training in these areas. These skills are becoming increasingly important. The insurance world is now beginning to change and “catch up” with other sectors, in terms of technology adoption. We should be aiming to claim a slice of the InsurTech pie and not just seen as the regulator checkbox guys or technicians. Let’s learn to bring more of an agile mindset to our work. I think it will be increasingly important to be able to think like an entrepreneur. Building, testing, iterating. Let’s continually learn to take initiative and find unique solutions to the new emerging business problems.

3. Data Science

Data science, especially machine learning, is becoming more and more important as a tool for actuarial work. It’s great to see the profession doing a lot in this space. Can the actuarial qualification act as a more general route into a career as a data scientist? I think it possibly can. We have a unique position in this space due to our code of ethics and highly regarded professional qualification/recognised credentials. Hence, we have a unique advantage over many others claiming to be data scientists (given anyone can now say they are a data scientist!). The problem though is the opportunity cost of learning irrelevant material (for much of data science) to get the actuarial credential.

4. Professional Actuarial Judgement & Business Acumen

Related to the above – there’s a lot of talk about automation and people losing their jobs to robots. Whilst there is a certain amount of hype around this, I do believe automation will change the nature of many jobs in the future. Digital and automation is the future and we need to be part of that. Let’s, therefore, ensure that we continue to add value beyond the number crunching by having the skills to exercise professional judgment and business acumen whilst staying on top of developing trends.

5. Supply & Demand

I think the profession has a role to play here to help ensure this is managed carefully in different parts of the world. India, in particular, seems to be currently feeling the effects of an over-supply of new “aspiring actuaries” having difficulty getting on to the actuarial career ladder.

I believe we can collaborate more with other actuarial bodies to effectively build brand “actuary” (trusted advisors of risk). There will always be risk and especially today risk is everywhere and changing all the time. I would like to continue to see brand “actuary” as the trusted advisors in financial risk, but with more creativity and innovation. I believe one of the key positives of our profession is that it attracts really bright people. We should focus on continuing to make the profession attractive to the brightest and best.

Our new IFoA President, John Taylor, has talked about “growing the membership,” so I think it will be interesting to see what direction this takes.

6. Innovative Research

A greater focus on truly innovative research. We live in exponentially changing times. Let’s be at the forefront of change and bring a creative, innovative mindset to our work underpinned by relevant cutting-edge research.”

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actuary quotes
Misc

30 Quotes on Studying & Learning an Actuary can Appreciate

“Success is not final, failure is not fatal: it is the courage to continue that counts.” ― Winston S. Churchill
 
“Judge a man by his questions rather than by his answers.” ― Voltaire
 
“The man who does not read has no advantage over the man who cannot read.” ― Mark Twain
 
“In three words I can sum up everything I’ve learned about life: it goes on.” ― Robert Frost
 
“Logic will get you from A to Z; imagination will get you everywhere.” ― Albert Einstein
 
“Education is an admirable thing, but it is well to remember from time to time that nothing that is worth knowing can be taught.” ― Oscar Wilde
 
“I have not failed. I’ve just found 10,000 ways that won’t work.” ― Thomas A. Edison
 
“Sometimes the questions are complicated and the answers are simple.” ― Dr. Seuss
 
“If you can’t explain it to a six year old, you don’t understand it yourself.” ― Albert Einstein
 
“The scariest moment is always just before you start.” ― Stephen King
 
“The fool doth think he is wise, but the wise man knows himself to be a fool.” ― William Shakespeare
 
“A room without books is like a body without a soul.” ― Marcus Tullius Cicero
 
“Finally, from so little sleeping and so much reading, his brain dried up and he went completely out of his mind.” ― Miguel de Cervantes Saavedra
 
“Never memorize something that you can look up.” ― Albert Einstein
 
“I am so clever that sometimes I don’t understand a single word of what I am saying.” ― Oscar Wilde
 
“The reason I talk to myself is because I’m the only one whose answers I accept.” ― George Carlin
 
“A reader lives a thousand lives before he dies, said Jojen. The man who never reads lives only one.” George R.R. Martin
 
“This life’s hard, but it’s harder if you’re stupid.” ― George V. Higgins
 
“Insanity is doing the same thing, over and over again, but expecting different results.”  Albert Einstein? 
 
“The more that you read, the more things you will know. The more that you learn, the more places you’ll go.” ― Dr. Seuss
 
“The difference between genius and stupidity is: genius has its limits.” ― Alexandre Dumas-fils
 
“Some infinities are bigger than other infinities.” ― John Green
 
“I have never let my schooling interfere with my education.” ― Mark Twain
 
“If you are going through hell, keep going.” ― Winston S. Churchill
 
“Any fool can know. The point is to understand.” ― Albert Einstein
 
“The only true wisdom is in knowing you know nothing.” ― Socrates
 
“Trust yourself. You know more than you think you do.” ― Benjamin Spock
 
“I refuse to answer that question on the grounds that I don’t know the answer” ― Douglas Adams
 
“You never fail until you stop trying.” ― Albert Einstein
 
“If at first you don’t succeed, try, try again. Then quit. No use being a damn fool about it.” ― W.C. Fields

 

 

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