Actuarial Risk Management works with many Top 30 accounting firms, including BDO USA, LLP and members of the global BDO network.We spoke to Cory Zass, Founder, Principal and Senior Consulting Actuary, of Actuarial Risk Management about how his innovative business model is designed to deliver the enterprise-wide solutions that organizations are continuing to seek.
The 2006 formation of Actuarial Risk Management (ARM), and its newest division, ARM Risk Solutions, fills a void for advice dedicated to the large middle market. Regardless of sector, many larger consultancies simply navigate towards the larger entities and look to have junior staff do the work. However, we leverage our collaborative business model to bring senior expertise available to middle market companies or through professional vendors. With our platform, we accommodate a range of middle market sized projects using an advisory price point lower than the larger firms. Our advisory roster span is wide and deep with our average actuary and risk advisor having 25 years of relevant experience and current thinking. Our collective experience results from times in both industry and larger consultancies, also benefiting from the academia and regulatory worlds.
There are recent studies indicating that over 60% of entities have never inventoried their risk exposures (including pensions) and a large number even then only focused on the risks transferable to the commercial insurance market. The middle market reality of these statistics is worse and with worse outcomes as a result. Our customers span many industries yet not limited to a geographical footprint, each desiring a fresh view of their risk profile and the opportunities it holds.
Our approach is simple - listen, observe, design, refine, monitor. At the option of our customers, we can stay to assist in the implementation or training of staff. Our philosophy does not subscribe to typical ‘risk silo’ mindsets held by most consultancies – we look for synergies and solutions beyond the property, liability, people (like pensions), and financial stability boundaries.
Our industry centric advisory teams have a wealth of practical experience. From an operational and economic standpoint, our bespoke designs correct a misalignment of our customer’s priorities, risk culture, and risk appetite. From our perspective, risk taking is an opportunity too, which requires a risk plan that is understandable, cost effective, sustainable, and positively impacts their operations.
We are not sceptics or pessimists, but we feel compelled to inform our customers of the risks of making uneducated “bets” or simply betting on the average or “doing nothing”. We commit to an honest perspective of their situation then identify cost effective “good tasting medicine” even though this more than likely departs from the tact of some current advisors. We ask tough questions beyond “what keeps you awake at night” then properly gauge the size and likelihood of risk exposures and recommend alternative solutions, if warranted. These solutions range from simple to creative to complex.
Corporate benefit plan sponsors are at a crossroads of balancing equity volatility, low interest rate norms, and rapidly growing aging workforce. From the sponsor’s position, defined benefit pension promises can no longer be viewed from the rear-view mirror. Taking full control of pension risks – encompassing the likes of longevity and investment risks - requires a unique perspective missing from current strategies.
Our experience indicates that many plan sponsor incumbents present some limited form of a generic elixir as the sole answer to managing their pension risks when current market conditions offer more options. Our insight will balance the company’s economics – short and long term - with positions taken by all plan stakeholders. Early open communications with C-Suite is critical to determine if they want to be “in the benefits business” (i.e. after inspection of the pros and cons, they may consider divesting the pension plan like an unwanted division or plant).
We understand that no one wants to be misled or made promises that were too optimistic. Factually speaking, many retirement promises of eras past inherently were poised to only work a fraction of the time. Recently our expertise is of interest to defined contribution asset managers looking to minimize the longevity risk transferred to the retirees. In other words, we are using actuarial techniques to give a higher degree of confidence that the retirees do not outlive their investments.
With market upheaval and worsening debt positions of major governments, pension plan decision makers must gain this hard-to-swallow advice so they can hope to reverse course on the near inevitable collision stemming from the smaller ratio of workers to retirees evolving daily. The good news is that these changes may structurally provide for equivalent, or perhaps even better, benefits for employees without putting additional pressure on the corporate balance sheet.
The instability is growing the risk aversive world we live. With our US base, our first priority is the US middle market followed by surgical expansion to other areas of globe. In fact, from our US base we already provide services to some customers across the globe. Regardless of risk the best management comes when you eliminate the emotions and look both holistically and proactively. We are committed to our Trusted Risk Advisor role to supply our customers with a value-add perspective on current and emerging risks.
Company: Actuarial Risk Management, LTD
Name: Corwin (Cory) Zass