Optimisation isn’t enough. Alignment is what matters.
Why Focusing on Individual Components Falls Short
Actuarial performance is often assessed by looking at individual parts of the function.
Systems are reviewed for efficiency. Models for accuracy. Data for quality. Processes for timeliness.
Each of these matters. However, assessed in isolation, they only tell part of the story.
When Strong Components Don’t Deliver Strong Outcomes
Improving individual components doesn’t necessarily improve overall performance.
A model may be technically robust, yet difficult to operate within existing processes.
A system may be powerful, but misaligned with how teams actually work.
Data may be available, but not structured in a way that supports efficient use.
In each case, the component performs as expected, yet the effectiveness of the function remains constrained.
Performance Is Defined by Interaction
What becomes clear is that performance is not simply the sum of its parts. It is shaped by how those parts interact.
Where alignment is lacking, friction emerge:
- Processes are adapted to accommodate system limitations
- Workarounds are developed to compensate for data gaps
- Additional controls are introduced to manage uncertainty
Over time, these adjustments become embedded.
What begins as a workaround becomes standard practice, increasing complexity and making underlying issues harder to identify.
Why Traditional Reviews Miss the Problem
When components are reviewed individually, they can appear adequate, or even strong.
It is only when viewed collectively that the disconnects become visible.
This shifts the focus away from individual capabilities and towards how the function operates as a whole.
A More Integrated View of Actuarial Performance
Improving actuarial performance requires a different lens.
Not one focused on optimising individual components, but one that considers how the function operates as an interconnected system.
Only then is it possible to identify where misalignment exists, and how improvement can be approached in a more coordinated and effective way.
This article forms part of a broader paper on The Missing Link in Actuarial Modernisation, which sets out a structured view of actuarial performance and how different components of the function interact.
