Joining forces: applying actuarial skills to management consulting
The challenges faced by the insurance sector are numerous and complex, and management consultants are at the forefront of helping the industry adapt. Half a year on from his election into the partnership, The Boston Consulting Group’s Ofir Eyal explains how the actuarial skill set can help the industry address its most important strategic decisions, and what he learned from his transition from actuary to management consultant
Actuarial work is challenging, interesting and rewarding, so I’m often asked why I jumped from working as an actuary into the world of management consulting. It’s a fair question, and the move was not one I took lightly. After 12 years in the consulting industry, more client projects than I can tally, and election to BCG partner in 2016, some of the reasons why I made the move and the lessons I learned in the transition are interesting to look back on and share.
I entered the actuarial world by chance with little experience in insurance. But the idea of combining mathematical rigor to business decisions was appealing, and with time I learned to appreciate and enjoy the beauty in the complexities of the industry. But I soon found myself more interested in the issues faced by the CEO rather than those faced by the Chief Actuary. And these issues are many and varied: the CEO and the leadership team must grapple with all the major strategic issues the business faces. They consider the overall direction of the company: how to achieve financial objectives, which markets to play in, and the design and structure of the organisation to best achieve the company's objectives. All while considering macro-economic, political, and broader industry trends such as the game-changing dynamics of the digitisation of insurance.
So there is no end to the kind of projects on which management consultants and insurers collaborate. This can range from pure strategy, to identifying the next big opportunity in the market, to improving clients’ claims or pricing strategy, through to more operational elements, such as how to integrate the in-house Asset Manager into the ALM process.
At the time, my move seemed like an exciting choice and has not failed to disappoint.
Actuaries are highly desired by management consulting firms. Their skills in applying sound logic to assess different business choices, coupled with a deep working understanding of technical insurance topics makes them a valuable addition to teams tackling clients’ big issues. When a CEO wants to discuss operations and has questions around the impact of business strategy on capital, risk levels and, for example product design, it’s the actuaries in the room amongst those who can provide the most thoughtful answers. Actuaries understand the nuts and bolts of the engine that drives the insurance company. It’s this credibility – along with the multi-functional and strategic management skills one could develop in management consulting – that has seen actuaries move into senior management roles.
In order to survive this period of extreme disruption, insurers need to be able to draw on a whole set of capabilities. Management consulting can create lasting change, and offers a unique opportunity to provide intellectual leadership by generating key ideas and conceptual frameworks, while contributing to the improvement of the methodology and tools used within the insurance sector.
Lessons from the transition
To make a successful move into management consulting and to get the best out of it, there are some key challenges that, on reflection, are important to bear in mind during that transition:
- Think top down – For one, when I started in management consulting, I tended to focus on the detail and take a bottom up view of issues, rather than the top down view most CEOs take when considering a strategic problem. This is a challenge faced by many actuaries as they move into management consulting.
- Be creative and think strategically – As actuaries, we also have a tendency to craft data to solve a structured problem; as the past is not always a good predictor of the future, management consultants generally take a hypothesis led approach, and rely heavily on their business acumen before turning to the data to support their hypotheses on a future business outcome.
- Adjust communication style to audience – Another challenge is being able to dip in and out of detail on request. It’s important to balance both a birds-eye, industry-wide view with knowledge of the intricacies of the industry, and communicate this effectively to the client’s C-suite.
I’ve sharpened these skills and my business acumen and learnt to trust my gut – vital skills for an actuary to be a successful management consultant.
Ofir Eyal is a Partner in the London Office of The Boston Consulting Group. He is a member of BCG’s Insurance Practice Area, and a Fellow of the Institute of Actuaries.