Chapter 3: Professionalism

Exercise Sample Solutions

Exercise 3.1
Before you go on to read any further in this chapter, think of three occupations which you
feel sure are professions. Then think of three occupations which you feel sure are not
professions. Dont agonize over your choice just list those which come quickly to mind.
For example, some people might say that accountants are definitely professionals, and
checkout operators are definitely not. Other people would disagree. What do you think?
There is no right or wrong answer to this question, so whatever you have said is correct!
For interest, below is a summary of the responses when the same question was put to five
actuarial students (who have not read this chapter):

Professions
Not Professions
Student A
Pharmacist
Gardener
Solicitor
Cleaner
Veterinary Surgeon
Milkman
Student B
Doctor
Cleaner
Actuary
Taxi driver
Accountant
Waiter
Student C
Doctors
Congressman/ Members of
Detectives (Homicide not
Parliament
Private)
Airport Security
Actuaries
Kitchen staff at Fast food chains
Student D
Chartered Accountancy
Temp. job at McDonalds or any
Actuary
fast food chain
Medicine
Telemarketer ( people working
Driver
in call centers)
Waiter
Newspaper Boy
Student E
Medicine
Student
Actuarial
Gambler
Accountancy
Homemaker
The students also made some comments or explanations about their choices. Here are some
extracts:
Student A: Sorry, it seems I am insulting a lot of hard working people, but a simple definition
I am using is - how much training goes into what I perceive as a profession!
Student C: First off what I do consider to be a profession is a field that has specific pockets of
information available to it, and these pockets of information are used in real life applications
through an ordered system that has a certain level of integrity. I consider homicide detectives
professionals because it is only through experience and being both open minded and open to
new/different ideas that their job gets done. While a private detective uses other peoples
sources of information and much more clandestine methods to reach their objective, which I

find carries less integrity and professionalism. Same goes for MPs or congressman. So I
guess lack of honesty and lack of integrity are the key factors in my deciding the above
careers to be non professional.
Student D: A person who joins as a driver or a waiter tends to build his expertise in that field
and will have to undergo some professional training before he can start work. If the person
does quit his job and decides to move on, then he would most probably have to join in the
same profession as his previous one because of his past experience. It would then be difficult
for him to change his line of work. it is not impossible to change ones profession, but for
that one might have to once again undergo some professional training; e.g. the waiter will
have to do a cookery course to move on and become a cook. However, a person working in
McDonalds or as a telemarketer etc is on a temporary job and is most probably working to
earn money for his/her college education or to fulfil daily expenses. The person does not need
to undergo any kind of professional training to be able to do the job.

Exercise 3.2
Write down the characteristics which you think distinguish a profession from an occupation
which is not a profession. For example, most people would say that a professional
occupation requires a lengthy period of specialized training/education. You might find it
helpful to think about the differences between the two sets of occupations which you listed in
your answer to Exercise 3.1.
Again, there is no right or wrong answer to this question.
Looking at the students examples and responses to Exercise 3.1, we can get an idea of some
of their ideas about what makes a profession. Firstly, Student A, and others, note that a
lengthy training is required. Note also that Student A apologizes for insulting the
occupations that do not rate as professions. This shows that the label profession is not
neutral. There is some status and respect that goes along with being recognized as a
professional. Student C picks up this idea by specifying that honesty and integrity are
required. Student Ds examples are chosen as being long term careers where practitioners
build up expertise, by contrast with temporary jobs. Student E has chosen unpaid
occupations for the non-professions, emphasising that professions are in paid employment.
The most frequent choices as examples of professions, appearing on four out of five lists, are
actuary - not surprisingly for actuarial students! and doctor/medicine. Medicine is typically
the occupation most people recognise as a profession. Apart from the long training involved,
based on science, doctors are often in a position of trust, applying their skills in practical
situations, and there is a general understanding that doctors belong to some sort of
organization and can be disciplined for unprofessional behavior by a professional body,
which is self-regulating.

Exercise 3.3
For each characteristic on the list which you drew up in Exercise 3.2, consider whether you
can fit it into one or more of these categories: knowledge-related, value-related, or
organizational.
Does this tell you what concept of a profession you were using when you made your list?
Again, there is no right or wrong answer to this question! It will of course depend on your
answer to 3.2.
Based on the characteristics mentioned above, a possible answer is:
knowledge-related: lengthy training; practitioners build up expertise; based on science
value-related: honesty and integrity; position of trust
organizational: disciplined for unprofessional behavior; professional body; self-regulating
The characteristics paid employment; applying their skills in practical situations dont quite
fit under any of these three headings. They are necessary conditions, but they dont in
themselves distinguish a profession from a non-profession.
None of the students made an explicit reference to the existence of a professional body,
except Student Ds reference to Chartered Accountancy, so it is not clear if they were
working to the full definition or using a more restricted definition which requires only
knowledge-related and/or value-related characteristics.

Exercise 3.4
Consider the following scenario:
You have produced a sophisticated and lengthy analysis and report for a client. As you are
delivering an oral report of the results of your analysis to the clients board of directors, a
director asks you a particularly insightful question. As you ponder your response, you
suddenly realize that you failed to take into account the issue the director raised, and your
conclusion may be materially incorrect.
Obtain the code of conduct for the actuarial body you belong to, or are likely to join.
Describe how the Code would guide your actions in responding to the scenario. 1
The following sample solution, based on the Society of Actuaries Code, is reprinted with
permission from the Society of Actuaries (2008), "Thought Questions: Professionalism
Scenarios," in Fundamentals of Actuarial Practice Module 1: Introduction / Role of the
Professional Actuary, Section 2, Page 41.

Scenario from Ryan, Bakos and Bloom (2003)

Heres what an actuary had to say:

This is the nightmare moment when you realize that you may have made a significant error
and, under the pressure of the moment, you may not be able to objectively consider it.
Precept 1 (an actuary shall act honestly, with integrity and competence) clearly comes
into play here. You would hardly be acting with integrity if you covered up a major error.
Precept 8 (take reasonable steps to ensure that actuarial services are not used to mislead)
also applies. Your work might well be misleading if a significant error goes uncorrected.
However, its probably not sensible to jump to the conclusion that you actually have made a
mistake that significantly resulted in an incorrect conclusion. The directors question may
well be addressed somewhere in your sophisticated and lengthy analysis. It is, therefore,
okay to say, Good questionlet me look into that and get back to you after the meeting. It
is not okay to stonewall the director with a highly technical answer designed to confuse and
obfuscate. Now, if upon subsequent analysis you determine that your conclusion is materially
incorrect because you omitted consideration of the questioned item, you would correct your
error (applying Annotation 1-4 of Precept 1: conduct should not involve dishonesty, fraud,
deceit, or misrepresentation) when you respond to the board member who raised the
question and others who received the original incorrect report.
Heres a follow up to the scenario: You go back to your office, reread the report and discover
that, although you did not take into account the directors issue, you made another
compensating mistake elsewhere in the analysis. As a result, your conclusions are quite close
to what they would have been if your analysis had been correctly performed, and any
discrepancy can be easily, and invisibly, corrected in next years analysis. What would you
do? What precepts apply? Sketch out your answers and then review the sample solution.
Heres what the actuary had to say:
It would not be a good idea to ignore a fix now. It is hard to be absolutely sure that "two
wrongs" make a "right." Users of your report may draw incorrect conclusions based on your
flawed presentation. Precepts 1 and 8 still apply. In addition, your mistakes could imply a
conflict with an applicable Standard of Practice.
Heres the scenario taken another step further: You go to your boss, a non-actuary, and
explain everything that happened. Your boss tells you that, because your conclusions are not
materially incorrect, the mistakes in the report are irrelevant and would only upset the
session. Your boss tells you to bury the error and correct it the following year. What would
you do? Sketch out your answers and then review the sample solution.
Heres what the actuary had to say: This also is probably not a good idea. Issues from Precept
10 (shall perform services with courtesy and professional respect and shall cooperate with
others in the Principal's interest) certainly come into play when dealing with your boss. Your
boss wants you to bury the error so as to not upset the session. However, it is reasonable to
believe that the board's interest is best served by having a factually correct report from you.
The requirements of Precept 1 (acting with integrity) should trump the urge to bury the
errors. Clearly, however, if the errors were trivial (such as spelling or minor calculation

errors), as opposed to offsetting major errors, and had no bearing on your conclusions, you
might reach a different decision about how to proceed.

Exercise 3.5
Read the SOA Code of Conduct for Candidates (on the CD).
(a) Summarize what you see as the three most important points.
(b) Whom do you think the Code is intended to protect?
(a) Your opinion may vary, and is just as valid, but we think the most important points are:
1. Act with integrity and competence. Everyone should try to do this, but you have an extra
responsibility because your behavior reflects on the whole profession, and because as an
actuarial trainee you may be in a position of trust.
2. Comply with the spirit as well as the letter of examination and other educational
regulations. The system of education and qualification is how the profession can guarantee to
the public that its members are competent, so maintaining the integrity of the system is
essential.
3. Deal responsibly with confidential material. Again, you may be in a position of trust which
gives you access to material you would not otherwise see. Live up to that trust.
(b) The code states that its purpose is to require Actuarial Candidates to adhere to the high
standards of conduct, practice, and qualifications of the actuarial profession, thereby supporting
the actuarial profession in fulfilling its responsibility to the public. So the aim is to protect the
public, who might otherwise be harmed by receiving actuarial advice from people who are not
competent, or by breach of confidentiality. The code also protects the actuarial profession from
loss of reputation, but this is not its main purpose.

Exercise 3.6
In the situation of the olive tree farm described above, what steps should you have taken to
avoid the potentially misleading use of your report?
You could have avoided this situation if your report made it clear wherever you relied on data
or assumptions supplied by the client. In the section where you present your conclusions and
recommendations, you could include a disclaimer to the effect that these conclusions are
based on information supplied by your client, and referring the reader to the relevant section
of the full report. In the letter of appointment, which you should have agreed with your client
before starting work, it could be agreed that the disclaimer will appear alongside any excerpt
or summary from your report which is attributed to you or which is described as being
actuarial advice.

This example raises an interesting point: Given that this is not a traditional actuarial analysis,
is the actuary still bound by the Code of Conduct? Can you avoid the Code by claiming that
you are not working as an actuary when doing this project, or can we never remove our
actuary hat?
There is some room for argument on this point, and Codes of Conduct may vary. The July
2009 Exposure Draft of the Institute of Actuaries of Australia Code of Conduct distinguishes
between Professional Service, defined as a service provided by a Member in a
professional capacity and Prescribed Actuarial Advice which is a subset of Professional
Service, and means work performed in a legislated role. Stricter standards apply to Prescribed
Actuarial Advice. According to the Exposure Draft, you wouldnt have to include the
disclaimer and restrictions in a report on the olive trees. Nonetheless, the Exposure Draft has
a number of things to say which would apply to this situation:
Potential misuse of Professional Services
4.7.1 A Member must not provide, or continue to provide, Professional Services to a Principal
when the Member reasonably believes the result of any Professional Services
provided will be used to evade the law or in a manner that is likely to mislead third
parties.
4.7.2 If a Member reasonably believes that the result of any Professional Services provided is
or has been subject to such misuse, the Member must, in the first instance,
immediately alert the Principal that he or she believes there has been misuse, and
clarify in writing the purpose for which the result was to be used. The Member must
also consider whether it is appropriate to offer to provide assistance to the Principal to
rectify any misuse.
4.7.3 In circumstances where the Principal does not address and, if necessary, rectify any
misuse within a reasonable time, and maintenance of confidentiality is or is likely to be
Materially damaging to third parties, the Member must obtain legal or other relevant
professional advice, and take the appropriate action required. Also, in such
circumstances the Member must consider whether, in the context of his or her legal
obligations, there is a greater obligation to such third parties than the maintenance of
confidentiality.
4.7.4 If a Member has reasonable doubt about whether the actions of a Principal are legal
and honest, the Member must consider his or her ongoing relationship with that
Principal.