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Non-traditional Opportunities for ERM Actuaries

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An unexpected non-traditional opportunity has turned into a fascinating, varied role for enterprise risk management (ERM) practitioner Nikolina Gateva, and it is a path she is urging other actuaries to follow.

Ms. Gateva, a Fellow of the Canadian Institute of Actuaries and Society of Actuaries, is vice-president of finance at Terragon Environmental Technologies, a company that develops simple appliances that allow communities to treat their waste locally and with no environmental damage. Their end users include isolated towns, ships, resorts, hospitals and more.

Her current role is a complete change from her previous work as a pension consultant, and she said, "I did not know I would be working in ERM when I started. I seized an opportunity to step out of the traditional actuarial role and be more of a general practitioner. Since then I have become more involved in risk management, identifying risk levels, and strategic decision-making."

Joining Terragon and taking on such non-traditional work was "a challenge and thrilling at the same time", she added, "because I put my skills to work in helping a company grow, and it is extremely rewarding. Many actuaries would excel at something [non-traditional] like this.

"It is a firm with a high knowledge of engineering, and they had not worked with an actuary before. The company was developing and needed expertise in investment, accounting, legal issues, and expanding an employee share plan. They thought a finance-oriented professional would be useful, and I think I was chosen not because I am an actuary but because I had the right skills to contribute. A lot of the talent that is perceived in me is due to my actuarial background. I spent eight years as a pension consultant—a fairly specialized career path—but this was an opportunity that spoke to me on a personal level. Revolutionizing waste management in the world is not a small mission."

According to Industry Canada, small to medium enterprises (SMEs) like Terragon drive the country’s economy: they deliver 60 percent of Canada’s economic output, and generate 80 percent of national employment and 85 percent of new jobs. All of which makes them ideal employers for actuaries keen to contribute to the industry.

Ms. Gateva said SMEs had a clear need that, at present, is generally unanswered: they would benefit from the help of a single versatile professional able to integrate such varied disciplines as investment and investor relations, accounting, forecasting, legal and governance. The solution: an actuary.

SMEs’ vulnerability to market fluctuations meant that they had the greatest need of, and therefore offered the greatest value to, an actuary skilled at identifying and managing the risk/opportunities inherent in all aspects of business. Ms. Gateva, who is based in Montréal, QC, has a hand in everything from small-scale projects to strategic decision-making, and said, "SMEs have always had to do a form of ERM because they are much more sensitive to fluctuations than larger companies, and they try to do their best to minimize exposures. I guard investment at every level, and wear several hats. For instance, I liaise with the company’s shareholders, bank and financing agencies, and monitor financial risk exposures and cash flow management—if you see a contract in U.S. dollars, you naturally think how you can minimize the currency risk. I would add that a key to success is an ability to rapidly integrate new concepts and learn independently, something actuaries are well equipped to do, as well as surrounding yourself with expert service providers."

She added that actuaries could be invaluable contributors in the field of ERM, but it could be difficult for them to envisage stepping out of traditional roles and moving into an enterprise where they could touch on every level of business simply because many are not aware of their "incredible toolbox of skills".

They are fully capable of taking on the abundant opportunities offered by SMEs that are looking for professionals skilled at ERM, she added. ERM gave actuaries a valuable platform to gain better visibility, if the profession could seize that chance: "We are confining ourselves to our core expertise. Why are chief financial officers mostly accountants? Companies do not know what actuaries do. They think we have a PhD in numbers but they do not know we are good at things like communicating results. In my interactions with stakeholders, being an actuary gives me credibility, but to companies we remain an obscure, highly specialized profession.

"Businesses are becoming more aware of the need for a structured approach to risk management. The economy has shown the need for planning and this is an area for which actuaries are well equipped.

"This is the only profession that considers a company as a whole, and ERM will be more important as firms struggle to adapt to the economic situation. We should focus ourselves on bridging the perception gap—ensuring that companies understand the unique value actuaries contribute, and also that actuaries realize that they can contribute. We must highlight the varied training we are fortunate to obtain, and our talent for finding practical, creative solutions."

 

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