Products

The Alchemy of Actuarial Science and Human Capital

Employee Benefits

The single largest issue with Human Capital is attraction and retention of talent. In an increasingly professional world, cash compensation is no longer a motivator. All else being equal, individuals prefer to work where they can learn and grow professionally, where they have a shot at fulfilling their destinies and where they are treated fairly. An aggressive professional development program satisfies the learning and professional development needs. An appropriate organizational design rewards performance and allows for natural upward progression in a firm’s hierarchy. A well-designed and well-balanced benefit plan addresses the future financial security concerns of employees.

As actuaries we are trained to take long-term institutional views and help employers create sustainable benefits solutions for their most important stakeholders. Historically the task was complicated by accounting, taxation, labour, actuarial, valuation and investment issues. We work with our clients to ensure they are at home with the picture behind the numbers and can also comfortably answer the following questions:

How well do you understand what actuaries do and what it means for you as an individual and as an institution?
Do you know where your benefits plans are today? Are you aware of where they are going?
Do you understand the short and long term impact of these plans on your profitability and financial health?
Do they make a difference in your employees' lives? Do your employees realize the value of what they have?
Are you using the optimal combination of solutions available to manage and distribute your short and long term risk exposure?

Insurance and Enterprise Risk Management

When all players in the market are focused on float and spread, a firm has to go beyond traditional thinking and tools to stake its claim as a leader. Combining frameworks from modelling, strategy, finance and simulation, our Insurance and Enterprise Risk Management practice helps clients increase their awareness and comfort level with uncertainty and risk. The practice addresses issues such as:

Interaction of assets, liabilities, investment decisions, product and the economic environment under specified, best case, worst case or random scenarios.
Daily, weekly, monthly and quarterly Earnings at Risk profiles for business lines, Assessment of Credit, Market, Liquidity and Operational risk exposure.
Reinsurance and self-insurance strategies that optimize profits, surplus and risk reward tradeoffs.
Maximum Possible Loss with specified degrees of confidence on client or product portfolio.
Creation of Enterprise Risk Management Groups and regular assessment of Credit, Market, Liquidity and Operational risk exposure.

The tools we use to answer these questions include:

Dynamic Financial Analysis (DFA). It provides an integrated platform for senior management to analyze, “in an uncertain and changing world”, the impact of business, competitive and economic forces on financial statements, solvency requirements and the probability of survival.
Value at Risk (VaR), Capital at Risk (CaR) and Maximum Possible Loss (MPL). Related applications that use similar expertise. While DFA provides for broader strategic analysis and is a mechanism for raising and answering questions, VaR, CaR and MPL speak with “confidence” about absolute values of loss likely to be experienced by an organization.
Surplus and Reserve Adequacy Analysis uses risk based capital insights to evaluate the booked risk profile as well as the sufficiency of surplus and reserves put aside to address that risk.

Strategic Product Management for Financial Services

Products operate in a dynamic environment. They need attention, stimuli and pruning. Organizations spend millions in developing product capital but leave the same products in auto-pilot mode post launch. In the financial services sector, where product fundamentals change on a daily basis, such a strategy leads to missed opportunities, lower margins and shrinking market shares. The strategic product management practice focuses on developing new product lines, revitalizing existing product portfolios and turning around troubled product segments.

Human Capital

Some believe that technology has been the greatest equalizer of organizations in the last three decades. Yet firms operating in similar markets with similar infrastructure, similar products and similar technology show great variance in their performance and their future potential. Where technology has been the great equalizer, Human Capital has been the great divider. Today, the strength and stability of their teams determines the distance organizations will travel.

Beyond designing professional development programs for the learning organization, Alchemy also assists customers with answering compensation and organizational design questions. In these arenas our thinking is driven by the work of Dr. Elliot Jaques on Felt Fair Pay, Task Complexity and Time Span of Discretion.

New Ventures

Ideas for a new venture start with a moment of blinding insight. Some start as accidents or unintentional mistakes, others take years of wandering effort to gel the real concept into shape. Regardless of cause, for most new start-ups, the flash of inspiration is followed by a down hill journey that fades into insignificance. It is a rare venture that realizes the full potential of its original vision.

Unlike parenthood, there is no paternal instinct that guides us in nurturing and growing young businesses. Beyond the missing paternal instinct, there is an observable pattern of repeated fatalistic behaviour that indicates failure is neither documented nor well understood. Our new venture practice believes in short circuiting the wandering incubation process, putting the plan to an immediate test, and failing or succeeding swiftly. Capital as well as the entrepreneurial spirit are valuable commodities and our respect for both drives our “fail quickly” thinking. The practice provides assistance with business plans, proof of concepts, market tests, funding, product development, execution, failure and human capital strategies.