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

Vikram, an actuary, is approached by a consultancy client to advise on a product for which he has only a basic understanding, because it involves a technique he has never used. The client is keen to start at once. Which action best reflects the value of competence?

Vikram should be open with the client about the limits of his experience and then obtain suitable expertise or peer support, or decline or refer the work. Competence means undertaking only work he can do properly, and the client's eagerness does not shift that responsibility.

  1. AAccept the work and learn the technique as he goes, without informing the client
  2. BAccept the work and bill extra hours for the learning
  3. CTell the client of the limits of his experience and either gain suitable expertise or support, or decline or refer the workCorrect
  4. DAccept the work because the client has taken responsibility for the choice
  5. Decline all future work from the client

Explanation

Competence requires that actuaries undertake work only where they have the necessary skill and knowledge, or secure appropriate help. Being open about limits lets the client decide. Learning secretly or passing responsibility to the client does not discharge the duty, and charging for learning time is unfair.

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