Practical lessons for successful actuarial transformation projects
Education on Lean principles and process improvement tends to rely on case studies from industries far removed from what actuaries can relate to.
Sure, it’s impressive that changing the flow of an assembly line increased production in a factory, but how do we translate these kinds of examples into something a valuation actuary can apply?
In the last instalment of my transformation series, I’m going to spare you the analogies and boil down years of involvement in a variety of transformation projects into four practical lessons my team and I have learnt from those that worked well.
1. Create incentives for buy-in
Leaders need to accept that introducing a transformation project will affect their teams’ KPIs. Employees have little incentive to complete tasks which do not directly contribute to performance reviews.
Therefore, including transformation-related objectives in performance discussions is critical to obtaining employee buy-in to transformation projects.
2. You can’t measure what you don’t manage
Benchmarking actuarial processes may not be as obvious as counting the number of widgets produced per hour, but it has to be done somehow in order to measure the outcome of any project.
As highly skilled professionals, actuaries enjoy a level of trust which has traditionally exempted them from having to complete detailed time sheets and record performance metrics.
And if uprooting this tradition is not the answer, it may be worth investigating software solutions which can assist in performing such measurements automatically.
3. Outsource where it matters
Typically, in transformation projects, contractors are brought in to help with the project work, leaving permanent employees to fulfil their BAU tasks.
This approach results in contractors who are enthusiastic and knowledgeable about the new process and permanent staff, for whom the process was designed, with little know-how of, and even less interest in, sustaining it.
Middle management should consider using contractors to assist with BAU work. Even if doing so releases enough capacity for just one person in their team to focus on transformation, it goes a long way to guaranteeing internal buy-in and retention of expertise after the contractors have left.
4. Optimise your existing actuarial tools
We know that the arsenal of an actuary confronted with a new problem comprises first principles and a blank Excel spreadsheet. As time passes and complexity increases, these become cumbersome and sluggish solutions.
In these situations, a transformation project does not have to be a huge end-to-end overhaul. Start small, look at the tools and software that you have.
Too often, teams will embark on significant projects or buy expensive technology when the systems they already had in place could have done the job just fine. Instead, they should invest in thorough training on what they already have; it often comes as a surprise just how much the application they’ve been using for years can actually do.
Final reflections
Throughout this series, I have shared my thoughts, based on years of experience at all points of the “project spectrum”, on why transformation projects are so often doomed to failure in actuarial teams.
If nothing else, I hope that it has generated some ideas and discussion at this critical time. To gain the most value from IFRS 17, we need to start adapting our systems and processes now to make sure they are sound and running efficiently by 2023.
And we’ll need well thought-out transformation projects, backed by strong leadership and plenty of buy-in, to get there.
If you would like to discuss any of the ideas shared in this series or find out how MBE can assist with your upcoming actuarial transformation projects from start to finish, please contact me.
I am backed by a highly skilled and experienced team of actuaries, IT specialists and process consultants, who are passionate about adding value to our clients’ businesses.
Read my full series on Transformation in Actuarial Teams starting with The Need For Transformation in Actuarial Teams.
This post was originally published on 28 June 2017 and updated on 16 March 2021
