Actuaries and Data Strategy – A Critical Step for Success

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“Your data is only as good as its strategy,” so says Competing on Analytics author and professor, Tom Davenport. Every company has troves of data but not very many have agreed on what to do with it or how to operationalize it. Companies are data-rich but information poor.

What is keeping actuaries from a successful utilization of their data? There is divide between information technology departments and actuaries. Dialogue and the mentality on both sides of the divide needs to improve and change. If actuaries spend too much time, validating, cleansing and manipulating the data as well as maintaining large models and valuation systems, they have no time to do the modeling and analysis that provide greater value to their organizations.

IT historically has a defensive strategy of controlling the data through cybersecurity and governance. Preventing breaches and hacks, following regulations and keeping data integrity all contribute to IT’s goal to “not mess-up” versus allowing the intense kind of experimentation actuaries like and the data could allow.

Actuaries and most analytical users focus on “freeing up the data.” With goals of making more money, building new products and improving relationships with customers, it is easy to see the value of an offensive strategy of data availability and flexibility.

Some companies are establishing Chief Data Officer (CDO) positions to bridge the gap between IT and actuaries. The CDO investigates platforms and security creating an environment to allow each functional user to access the information they need. Mark Gambill, CMO of MicroStrategy calls it, “the democratization of data.”

If hiring a CDO is not ideal, companies are using consulting firms like Novarica to provide a current assessment of the state of their data and analytics strategy and a roadmap for implementing changes and defining responsibilities. Novarica looks at what are the business goals and strategic opportunities broken down by business function, what are the current pain points and capabilities, who are the leaders that are implementing the guiding data principles and what are the ease of use and supportability of the current processes and technology.

Michael Hughes and Tim Pauza of the Insurance and Actuarial Advisory Services practice at Ernst & Young recommended the following goals in their blog for building a better data strategy:

  1. Shared Vision for Technology-enabled Actuarial Excellence
  2. Platform Upgrades and Rationalization
  3. End-to-end Automation and Control
  4. Reinventing Data Management
  5. Implementing Processing Capacity at Supercomputing Level
  6. Control AND Flexibility
  7. Standardizing Business Intelligence
  8. Dedicating IT Support for Actuarial
  9. Utilizing Robotics
  10. Ongoing Dialogue Between IT and Actuaries

The language and cultural barriers between IT and actuaries can be formidable and difficult to navigate. The company that does effectively sail through this divide will monetize their data and their success. As management theorist, Peter Drucker, said, “Information is data with relevance and purpose.”

Interested in hiring an Actuary or in discussing your actuarial career? Contact Rory Hauser at rhauser@smithhanley.com or 203.319-4305.

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