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

Rohan is an actuary asked to value a pension fund for a trust. He realises that his brother-in-law is one of the trustees who will decide whether to adopt his recommended funding rate. Which response is most consistent with professional values?

Rohan should disclose the relationship openly to the client and relevant parties and then judge whether the conflict can be managed or whether he should decline. Transparency about a potential conflict protects objectivity and public trust; silence or deliberately biased advice does not.

  1. ASay nothing, since the relationship is not a financial interest
  2. BDisclose the relationship to the client and relevant parties, and consider whether the conflict can be managed or whether he should declineCorrect
  3. CAccept the work and quietly select a conservative funding rate to prove impartiality
  4. DDecline the work without giving any reason to the client
  5. Disclose the relationship only if the brother-in-law votes in favour of his recommendation

Explanation

A relationship that could reasonably appear to affect objectivity is a potential conflict of interest and should be disclosed so the client can decide. He should then consider managing it or declining. Silence hides it, and a deliberately conservative rate would itself bias the advice. Conditional disclosure comes too late.

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