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IAI Actuarial Core Principles · Business Management · Decision-making process, attitude to risk and competition

An actuary advising a pension-fund manager notices that, in the industry value-chain analysis, a competitor has integrated asset management in-house, cutting external fees. Which action by the actuary best reflects the Actuaries' Code principle of communication and integrity when reporting this to the client?

The actuary should present the finding clearly with its limitations and uncertainty about the savings. Honest, complete communication reflects integrity and the Actuaries' Code. Omitting, exaggerating, selectively reporting or sharing client information with a competitor would breach professional and confidentiality obligations.

  1. APresent the finding and its limitations clearly, including uncertainty in the estimated cost savingsCorrect
  2. BOmit the finding because it could weaken the client's strategic confidence
  3. COverstate the savings to prompt quick client action
  4. DShare the client's analysis with the competitor to verify the data
  5. Report only figures that support the client's current strategy

Explanation

Professional conduct requires honest, clear communication that includes material limitations. Hiding or exaggerating findings, or breaching confidentiality by sharing with a competitor, would be unethical.

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