Actuarial Software Implementation From Planning to Success
description
Transcript of Actuarial Software Implementation From Planning to Success
![Page 1: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/1.jpg)
1
Actuarial Software Implementation From Planning to Success
Actuarial Society of Greater New York
November 18, 2013
Trevor Howes, FCIA, FSA, MAAA
VP & Actuary, GGY AXIS
![Page 2: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/2.jpg)
Agenda
• Introduction
• Scope of project
• Systems implementation planning
• IT considerations
• A useful resource: PBA Implementation Guide
![Page 3: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/3.jpg)
Challenges Impacting Actuarial Software
.Economic
Enviroment
Rapidly changing & new risks
ActuarialModels
External StakeholdersInsurance Industry
HR costs
TechnologyInnovation
Scarce capital; risk aversion
Low interest rates
Rapid changes
Multi-corechips
Ratings agencies
Demand for higher dividends or ROC
New products and pricing
PBA
Regulators C3P2,3
MAR
SEC/FASB
SOX FASB 133, 157, SOP 03-1, etc.
3
Volatile markets
ORSA
IASB/IAIS convergence
???
???
IT support
Actuarial support
![Page 4: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/4.jpg)
Handle conflicting priorities in model design
Increase model realism• More detail, granularity• Asset/liability interaction• Holistic, integrated models• Reduce/control shortcuts
4
Increase model flexibility• Multiple applications• Production/ad hoc use• Constant evolution as
needs, technology change
Improve model control• Reduce model risk• Assure run-time reliability• Support auditability and
transparency standards
Reduce model expense• Reduce maintenance and
validation effort• Use technology efficiently• Optional model efficiency
techniques
![Page 5: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/5.jpg)
5
Pricing & Product Development
Valuation, CFT & Compliance
Projections, ALM & Business Planning
Capital, Earnings & Experience Analysis
The Push for a Single Multi-function System
![Page 6: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/6.jpg)
Types of Actuarial System Implementations
Many possible variations…• New system vs. conversion/upgrade to existing system• Narrow Scope (single product & purpose) vs. Large Scope
(multiple purpose, multiple lines of business) • Source of system: user vs. vendor written• Approach to system maintenance: open vs. closed code ?
6
o Fully open
o Partially open
o Fully closed
User has access to and maintains all source code
Portions of code locked; some user programming
Only vendor maintains source code
![Page 7: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/7.jpg)
Why are Systems Implementations Challenging?
• Increasing complexity and precision of models• Desire to improve capabilities, provide more analysis,
improve consistency, move to convergent systems• Large diverse inforce product portfolios issued over past
decades and by various entities • Need to develop, test, implement new system while
continuing to maintain existing systems and processes
• Systems implementations are major, resource intensive projects with potentially significant risks …but may be essential to transform the actuarial function and to cope with emerging demands more efficiently
7
![Page 8: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/8.jpg)
8
What are the Key Success Factors?
1. Expert knowledge of the company’s systems, data and processes
2. Expert knowledge of the company’s products
3. Expert knowledge of new software including best practices for model development
4. Appropriate planning and project management
5. Appropriate time and resources to work on the project
6. Commitment from senior levels of the organization
1. Create a realistic vision of the intended final solution
2. Effectively manage the transition process
![Page 9: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/9.jpg)
Actuarial Models vs. Enterprise Applications
(Actuarial modeling engine)
![Page 10: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/10.jpg)
Source Stored Results
Actuarial Models vs. Enterprise Applications
(Enterprise Systems and Databases)
(Actuarial modeling engine)
![Page 11: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/11.jpg)
Source Stored Results
Actuarial Models vs. Enterprise Applications
(Enterprise Systems and Databases)
(Actuarial modeling engine)
Software: Operating system / Network software / Grid Manager / Database Managers
Hardware: Desktop/Laptop/Servers/Storage Devices
(IT Infrastructure)
![Page 12: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/12.jpg)
The System Solution is more than the System
![Page 13: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/13.jpg)
PBA Solutions will be much more than software
“The challenges in a PBA world will be solved through collaboration and people exercising wisdom and judgment to make actuarial and business decisions in the face of ambiguity.” - SOA PBA Implementation Guide, pg 120.
13
![Page 14: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/14.jpg)
Create Vision of System Solution
• Vision of future system solution is not a stand-alone application, but part of enterprise level system• Need to understand and plan for all related elements not just
actuarial modeling functionality
• Data input; data output; validation; audit; governance• System solution includes the people; consider not just
actuarial roles of model maintenance/model use, but others roles such as management and IT support
• Need to plan for staff transition and training during project• Documentation must be created and maintained as model is
developed, not added after
![Page 15: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/15.jpg)
Planning in a New and Uncertain Environment
• Systems implementations involve changes in scope, capabilities, process; not just change from one software product/solution to another
• Different software systems will require different approaches to system structure, processing steps, data flow, report generation, auditing support, etc.• Not a drop in replacement of previous software
• Need to learn new software’s capabilities, strengths first • Then look for opportunities to improve processes, and
address broader objectives and goals
15
![Page 16: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/16.jpg)
Retain Flexibility in Model and Plan
• Expect ongoing changes in environment, vision and plan• as project continues and • after completion
• Future models will need to evolve and adapt as regulatory and accounting standards, management needs continue to change change
• Build a flexible model framework that can be adapted after implementation phase completed
• Careful consideration of model governance issues• Maybe separate initial project to design governance policy?
• Expect to revisit the plan itself as it progresses
16
![Page 17: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/17.jpg)
Planning in a New and Uncertain Environment
• Initial planning should be• Kept at reasonably high level • Intended for preliminary assessment of resources and
organization, identification of potential risks and bottlenecks• Plan project in phases, including pilot study (prototype) that
implements and tests full end-to-end process; • Need for changes in model structure may become evident and
more easily implemented while model still small • Communicate realistic expectations up front and repeatedly
through project• Also plan for inevitable changes in the project team
• Training may be a continuous requirement• Documentation as work continues is critical
17
![Page 18: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/18.jpg)
Involve IT in Project Planning
• Need to involve IT in planning as early as possible• New modeling demands require more processing power for
ongoing testing and implementation of assumption changes as well as for production runs
• IT is often viewed as an adversary instead of a teammate• Planning, sourcing, installing appropriate hardware takes time• Actuarial models are not similar to typical insurance systems• New software may be quite different than previous system• Involve and trust the vendor for advice on specific hardware
specifications that will provide value for dollars spent• Consider option to use private or public cloud instead of
company hosting either temporarily or permanently• IT may assist in model governance planning
18
![Page 19: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/19.jpg)
PBA Implementation Guide - Roadmaps
A Road Map conveys planning information identifying “what,” “how much,” “who,” “when,” and “how.” A Road Map is:
• A multiyear integrated set of projects or initiatives and prioritizations
• An articulation of the right steps and resources
• A top-down high-level estimate of projected work efforts, duration timelines, and all-in costs
• A prioritization framework to evaluate alternatives and their cost-benefits and to translate implementation requirements into tangible steps
• A platform to provide focus and to facilitate ongoing analysis of priorities, timelines, and investments
A Road Map’s initial purpose may be in securing management’s approval and a PBA budget.
(Extracted from PBA Implementation Guide, pg. 10)
19
![Page 20: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/20.jpg)
PBA Implementation Guide - Roadmaps
The Road Map Guide … has the following sections:
Introduction
1 Assumption Setting
2 Inputs
3 Model Platforms (Throughputs)
4 Outputs
5 Technology and Systems
6 Actuarial Organization
7 Potential Road Map Initiatives
20
(PBA Implementation Guide, pg. 96)
![Page 21: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/21.jpg)
PBA Implementation Guide – Case Study Roadmaps
• 6 illustrative Case Study Road Maps (templates)• Implicit considerations included:
21
• recognition of priorities• ease of implementation• current framework and gaps• importance• costs • realized benefits• work effort• resource availability• skill set gaps• conflicts
• bottlenecks• dependencies • discontinuous work efforts
and business or project continuities
• execution risks• coordination with other
company projects• balancing PBA work efforts
with day-to-day activities.
(PBA Implementation Guide, pg. 26)
![Page 22: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/22.jpg)
Sample Case Study Roadmap
22
![Page 23: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/23.jpg)
Sample Road Map Initiatives
23
![Page 24: Actuarial Software Implementation From Planning to Success](https://reader036.fdocuments.net/reader036/viewer/2022062722/56813a17550346895da1f410/html5/thumbnails/24.jpg)
Reference:
• PBA Implementation Guide - a 2013 Research report sponsored by Society of Actuaries, prepared by:
Tim Cardinal, FSA, CERA, MAAA
Steve Stockman, ASA, MAAA
• For the full report, go to:http://www.soa.org/Files/Research/Projects/research-2013-pba-implementation-guide.pdf
24