Actuarial Ethics Essay

7988 Words May 3rd, 2012 32 Pages
Essay

Ethics is a social science that refers to the study of human conduct and moral principles. The role of ethics and moral judgement is increasingly playing a more significant role in the corporate world. The concepts of personal values and moral judgement are inextricably connected. As a result, I believe that as professionals, whether we choose to act according to our morally intelligent conclusion, or ignore it, is highly related to individuals underlying personal values.

When professionals are required into making moral decisions, they are forced to rely on their ethical reasoning. However Maggid’s web article argues that, Modern Actuary ethics goes further than the ‘minimal legal compliance’ (Maggid, 2010). Whilst an
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As actuaries, we will be forced into positions of large responsibility, we will be required to advise and make critical business decisions based on mathematical and historical evidence or by specific company rules and regulation. As a result, exercising ethical decisions are particularly important for an actuary. Many financial institutions rely on actuarial mathematical models and actuarial rationale, more specifically; an insurance company’s profit levels are dependent on the actuarial team’s policy reserve model. Thus there may be significant pressure by the board of directors to manipulate the structure of its policy reserve model, so that it can maximise its profits on paper. However, an actuary’s manipulation of the reserve levels could consequently increase the level of risk exposure, as the inaccurate policy reserve levels could potentially distort how much claim cover the company actually has. In this situation an actuary must be able to feed off it’s underlying personal values and block out the external environment and the pressures of the CEO board. Without personal values, even the smartest actuary would succumb to the external pressures of the corporate environment. This in turn could put financial institutions at risk, and when major institutions are at risk, it will have an impact on the

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