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IAI Actuarial Core Principles · Business Management · Characteristics of a profession and the Actuaries' Code

An IAI Fellow is asked by a client, a private bank, to value a liability. The bank's chief executive, who is also the Fellow's close relative, will receive a bonus linked to the result. The Fellow believes they can remain objective. What is the most appropriate course under the Actuaries' Code?

The Fellow should disclose the conflict to the client, honestly assess whether objectivity can be kept, and decline or add safeguards if not. Self-belief in objectivity is insufficient, and concealing the relationship or passing the work on undisclosed fails the Code's requirements on conflicts and integrity.

  1. AProceed silently because personal belief in objectivity is sufficient
  2. BDisclose the conflict to the client, assess whether objectivity can truly be maintained, and decline or put safeguards in place if it cannotCorrect
  3. CReduce the fee and proceed without telling anyone
  4. DPass the work to a junior colleague without disclosing the relationship
  5. Decline all future work from the bank but complete this one undisclosed

Explanation

The Code requires members to identify and manage conflicts of interest, with disclosure as the starting point. Belief in one's own objectivity is not enough; safeguards or withdrawal are needed if independence is at risk. Hiding the relationship or delegating it undisclosed does not resolve the conflict.

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