Advice from Krzys' Ostaszewski on communication for actuaries

This represents ONLY Krzys' personal opinion


There are THREE RULES OF COMMUNICATION FOR ACTUARIES:

• Know your audience
Whatever you are communicating, please remember that the way you communicate must be tailored to the audience. This means that you must know the audience. Actuaries tend to naturally communicate as if they were speaking to actuaries. But, surprisingly, not all people in the world are actuaries. In fact, most people are not actuaries. And when you tell people things they completely do not understand, they do not make a special effort to understand. Instead they turn off, they do not pay any attention at all. It is better if you communicate only 5% of your message, especially if it is the key 5%, instead of trying to deliver 100% of technical contents, and ending up with your audience receiving 0% of your communication. If you want to see the difference between an audience of actuaries and an audience of non-actuaries, try showing your audience a table of numerical values. Actuaries may be the only audience in existence that will come to life instantly when the see a table of numbers: They immediately start looking for patterns and are thinking of what kind of statistical analysis they can do on that table. Other audiences? Not so much. Speak to the audience you have, and make certain that you know and understand the audience you have. And remember: In real life actuarial work, your audience is typically the management team. Management folks typically don’t have a lot of time, and tend to have decisive personalities. When you speak to them, get straight to the point, and keep the message short. Know your audience.

• Tell a story
For actuaries, discussing the mathematical models that underlie the results they present is very exciting. But to most people, it is not. When you are speaking to those weird non-actuarial types, do not throw your mathematical models around, do not show large tables of numbers, or do not just give them a spreadsheet so that they can figure out the model themselves. Instead, tell them a story. An actuary at one of the largest automobile insurance company in the world told me once that he was explaining to an audience of sales agents why they needed to raise rates, and gave them the complete formula used, showed how certain increased cost fed into the formula and how resulting rates were higher, all mathematically, and all he received was semi-hostile silence. Actuallty, 100% hostile. Then he said: It's like when you have water in connected containers, if you push it down in one container, it will have to go up in any connected containers. And the entire audience said: "Oh! I see" (I know this is unbelievable to a mathematical type, but please think about it). And they accepted the actuary's rate increase. I know, once you hear this, you want to jump to going over the hydrostatic paradox. Please don't! Think about another one: If one in a million lottery tickets wins, and the winning ticket pays a million dollars, then almost any audience will agree with you that $1 is the fair price for a lottery ticket (or $2 if the state running the lottery wants a 100% profit). Can you show the similarity between this and the Black-Scholes Formula? Yes, I know, it's two quantities multiplied by their own probabilities, but the difference between the values of those two quantities at option's expiration is the payoff, right? So the formula is sort of like the present value of payoff modified by probabilities, right? So it's like a lottery ticket, right? Think about this next time you explain the Black-Scholes Formula to a non-mathematical audience. Practice presenting technical topics to non-technical audiences. Tell a story.

• Make your point
The mathematical types, i.e., us, like to discuss a problem, point out all nice technical details, carry the reasoning through, and then ... wait for the audience to say "Oh, I see!". We just love the Socratic Method: Guiding people's reasoning to the right conclusion. I hate to bring this up, but remember what happened to Socrates. If you are hired as an actuary, you are the one in charge of doing the technical stuff. Then you are expected to deliver the conclusion. Deliver it clearly, succinctly, explicitly. Tell them very, very specifically what the conclusion is. Just as they teach in sales: At the end, you need to clearly ask your client to write a check (sign a contract, etc.). Your presentation must, absolutely must, include the key result(s) of your work or the key point(s) you are making. You must tell them what those are, do not expect them to infer them from your words. And, very often, you should state your conclusion/recommendation twice: At the beginning of your presentation and again at the end. You must make absolutely and perfectly clear what your recommendation is. Make your point.


All information contained here is, to our best knowledge, correct, but it is merely a representation, and should not be considered to be any form of professional advice. This electronic publication should not be misconstrued as the official position of Illinois State University, or its Department of Mathematics. We are glad to provide as much information as possible here, but we kindly ask that in any decision related to matters listed here you seek additional counsel and information. Comments on this page are welcome and should be sent to Dr. Krzysztof Ostaszewski  at his e-mail address: krzysio@ilstu.edu.