a u s t r a l i a n a c t u a r i a l j o u r n a l 1998 Volume 3 Issue 3 Feature Articles Ethics, Actuaries (and Robots) – Ian Robinson For the Records Discussion Paper on Superannuation Tax Reform and Simplification – C Nance Notes Expense Apportionment for Life Companies - Some Observations and Potential Profit Impacts – David Hotchkies. ETHICS, ACTUARIES (AND ROBOTS) Prepared by Ian Robinson, FIA, FIAA, ASIA, ASA October 1998 This paper reviews the subject of ethics and ethical decision making from the perspective of actuarial work. Issues discussed include the general nature of ethics, business and professional ethics, and guidelines for resolving ethical problems. The paper then attempts to consider the ethical standing of the actuarial profession; a key focus of this section of the paper is the results and review of a recent survey of the actuarial profession in Australia. The paper concludes with some suggestions for how the profession should proceed to enhance the ethical profile of actuaries. i ETHICS, ACTUARIES (AND ROBOTS) TABLE OF CONTENTS PART A REVIEW OF ETHICS AND ETHICAL DECISION MAKING .................................................1 1. INTRODUCTION...............................................................................................................................2 1.1. A Lesson from Robbie ........................................................................................................................2 1.2. Outline of Paper ..................................................................................................................................3 1.3. Professionalism and Ethics .................................................................................................................4 1.4. Purpose and Scope..............................................................................................................................5 1.5. Structure of Paper................................................................................................................................6 2. WHAT IT MEANS TO BE ETHICAL................................................................................................8 2.1. Why ethics matters ..............................................................................................................................8 2.2. The nature of ethics .............................................................................................................................9 2.3. Right vs wrong decisions ..................................................................................................................11 2.4. Right vs right decisions.....................................................................................................................13 2.5. Values ...............................................................................................................................................14 3. THE NATURE OF BUSINESS ETHICS ..........................................................................................17 3.1. The relationship between business and ethics...................................................................................17 3.2. General comments.............................................................................................................................18 3.3. But why can it be so hard to be ethical?............................................................................................19 3.4. When in Rome …..............................................................................................................................21 4. THE NATURE OF PROFESSIONAL ETHICS................................................................................23 4.1. Ethics as power sharing ....................................................................................................................23 4.2. The importance of openness and trust................................................................................................24 4.3. Ethical dilemmas in professional work.............................................................................................26 4.4. How is the shared morality of a profession maintained?...................................................................26 5. SOME PROFESSIONAL DILEMMAS.............................................................................................28 5.1. Whistleblowing.................................................................................................................................28 5.2. Maintaining confidentiality................................................................................................................30 5.3. Conflicts of interest...........................................................................................................................30 6. THE CODIFICATION OF ETHICS..................................................................................................32 6.1. The origin and nature of codes of ethics............................................................................................32 6.2. What can be achieved by a code of ethics.........................................................................................33 6.3. The weaknesses of codes ..................................................................................................................34 6.4. When codes work..............................................................................................................................35 7. RESOLVING ETHICAL ISSUES .....................................................................................................37 7.1. What should businesses do?..............................................................................................................37 7.2. Ethical dilemma paradigms...............................................................................................................37 7.3. Criteria for ethical decision making..................................................................................................39 7.4. Models for ethical decision making ..................................................................................................41 7.5. Ethical fitness....................................................................................................................................42 7.6. Sleep-test ethics ................................................................................................................................43 ii ETHICS, ACTUARIES (AND ROBOTS) PART B THE ACTUARIAL PROFESSION AND ETHICS....................................................................45 8. ARE WE AN ETHICAL PROFESSION? .........................................................................................46 8.1. What is expected of us?.....................................................................................................................46 8.2. What has been the reality?.................................................................................................................48 8.3. Some further questions to ponder ......................................................................................................50 8.4. How have our actuarial values served us?........................................................................................51 8.5. Other Professions..............................................................................................................................53 8.6. Bulletin Survey..................................................................................................................................54 9. SURVEY OF AUSTRALIAN ACTUARIAL PROFESSION............................................................56 9.1. The survey aims and scope................................................................................................................56 9.2. The sample characteristics................................................................................................................57 9.3. General perceptions about ethical standards of actuaries..................................................................61 9.4. Factors influencing the ethical behaviour of actuaries.......................................................................63 9.5. Ethical issues in actuarial work ........................................................................................................65 9.6. The Code of Conduct.........................................................................................................................68 9.7. Ethics education................................................................................................................................70 9.8. Comparisons with Accounting Profession.........................................................................................74 9.9. Conclusions.......................................................................................................................................74 10. FINAL COMMENTS AND RECOMMENDATIONS ......................................................................76 10.1. Dispelling the Myths.....................................................................................................................76 10.2. Call to Action...............................................................................................................................76 10.3. Conclusion....................................................................................................................................78