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IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies

Rohan, an actuary, is advising a pension fund trustee board. He discovers that his firm is also advising the sponsoring employer on a negotiation with the same trustees, where the parties' interests are opposed. Which action best fits professional standards on conflicts of interest?

Rohan should identify the conflict, disclose it to those affected and manage it with proper safeguards, or decline one of the mandates if it cannot be managed. Assuming objectivity, silence, higher fees or internal reassignment do not resolve a real conflict of interest.

  1. AContinue with both mandates because actuaries are presumed to be objective
  2. BIdentify the conflict, disclose it to the affected parties and manage it, or decline one engagement if it cannot be managedCorrect
  3. CKeep the conflict confidential so as to protect client confidentiality
  4. DContinue and charge a higher fee to compensate for the added risk
  5. Pass the trustee work to a junior colleague at the same firm and say nothing

Explanation

Professional standards require conflicts to be identified, disclosed and managed, or the engagement declined. Presuming objectivity or staying silent does not remove the conflict. Moving the work within the same firm leaves the conflict in place.

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