By Émilie Bouchard
Editors' Note: This article first appeared in the Spring 2014 issue of the SOA Canadian In Touch newsletter and is re-printed here with permission.
Émilie Bouchard, FSA, FCIA, is SOA staff fellow, Canadian Membership.
“Knowledge is like money: to be of value it must circulate, and in circulating it can increase in quantity and, hopefully, in value.”—Louis L’Amour
Minaz Lalani is a successful entrepreneur and one of the leading Canadian actuaries in enterprise risk management (ERM). I interviewed Minaz so he could share his views and advice on ERM and starting a business, as well as his personal vision statement.
Minaz Lalani, FSA, FCIA, CERA, is managing principal, Lalani Consulting Group.
He can be reached at minaz@lalanicg.com.
How did you end up specializing in ERM and how did you acquire all of the necessary knowledge and skills?
In 2002, I volunteered with the Society of Actuaries (SOA) working group to develop an educational note on ERM. Even though the focus of that working group was more on strategies for insurance companies, it piqued my interest with respect to the applications of such concepts for pension plans and other non-financial organizations. I acquired and expanded my knowledge through self-study of books and articles on risk management, attending symposiums, and participating in committees of the SOA, the Canadian Institute of Actuaries and the International Actuarial Association with a risk management focus, including the development of the ERM exam syllabus and the Chartered Enterprise Risk Analyst (CERA) credential requirements. While I was deepening my knowledge, I started sharing basic theoretical concepts with my clients to educate them on how to identify, assess and quantify risks. I believe that good dialogue is very important when assisting clients with their ERM framework. As I became more comfortable with the terminology and the concepts, I started implementing practical applications of the concepts, including more actuarial quantification of risks.
Did your actuarial background give you a competitive edge over other players in that field?
Even though there are a lot of professionals involved in risk management these days, I believe that our robust actuarial knowledge and skills in qualitative and quantitative analysis provide us with a competitive advantage. This is particularly true for actuaries with the CERA credential. Having said this, in order to differentiate ourselves from other professionals and to maintain our competitive edge, we need to continue to develop our strengths, keep up with changing environments and promote the CERA designation.
How can pension actuaries assist plan sponsors to create an ERM framework in their organization?
Even though pension actuaries have traditionally focused on pension plan risks in isolation, from my experience, pension plan risks fit nicely into an ERM framework. In order to get involved in the implementation or refinement of an ERM framework for a pension plan sponsor, I usually go through the following steps:
- I map out pension risk components.
- I conduct meetings with key client contacts during which I guide open-ended questions to gather information on their business risks, in order to understand my client’s business and the key measures that drive their organization.
- I educate my clients as to how the pension risks fit into their entire risk framework. All of these discussions help me understand their business, but they also help clients learn about risks and identify their own business risks. Provided I connect with the key risk managers within the organization, the information I provide on how pension plans fit within their entire risk structure is my entry point to being more involved in their ERM framework.
What are the necessary attributes for designing and implementing a successful ERM strategy?
Successful ERM strategies include the following:
- Well-defined risk policies with a risk appetite measure, including, for each type of risk, target and maximum levels the organization is aiming for.
- A robust risk culture: A sustainable system of values and behaviors that shape decisions across the organization. It is important that the risk language be rigorous within the organization, with everyone using the same taxonomy to mean the same thing. It is also crucial for decision-makers to see risk as opportunity and not just as something bad that can happen.
- A strong risk governance model, in which roles and responsibilities are well-defined and where people are held accountable for their actions. The model needs to encourage people to manage risks with the business objectives in mind and to facilitate effective communication and reporting between departments, the management team and the board.
Given the increase in regulatory demands, how do you envision the use of the ERM framework in corporations evolving in the coming years?
In the financial sector, given that banks and insurance companies had to comply with regulations like Basel and Solvency II, as well as to meet risk management requirements from rating agencies, they have implemented ERM strategies in the last few years. Given that more regulations are being adopted (like Own Risk and Solvency Assessment requirements), and recognizing that ERM frameworks are not static, they will continue to improve their existing ERM practices.
In the non-financial sector, ERM practices are not as common. Some industries like commodity trading, energy and mining have implemented some risk management practices, but most organizations have not implemented full ERM strategies. I believe that the impetus for organizations to implement ERM frameworks will be business necessity and not regulations. Once companies realize that ERM is not just about the reduction of losses but that it allows the optimization of decision-making (to achieve efficient allocation of risk capital, better risk-adjusted earnings, greater shareholder value), they will implement ERM frameworks. I do believe, however, that the evolution of practices will be slow and steady.
What motivated you to start your own business?
After I finished University, I accumulated over 30 years of experience, working for a life insurance company in the United Kingdom (U.K.), a medical insurance company in the U.K., as well as a consulting firm in retirement in Calgary. At that point, I felt like I had acquired sufficient skills and experience to start my own business. My goal was to be my own boss, to semi-retire while working in a less demanding environment, and to provide unique and unbiased consulting on actuarial risk management issues. Now to be honest, the “working in a less demanding environment” part has yet to materialize.
What advice would you give to someone who wants to start his/her own company?
You need to have a solid plan regarding your value proposition, the type of clients you want to engage with, the type of projects you are interested in doing, the type of people you want on your team, and how much earnings you are targeting. I would advise you to set some capital aside initially to smooth out fluctuations in earnings and not to underestimate the demands and commitment necessary to run your own business, at least initially. You need to be prepared to assume several responsibilities for a while (consulting, sales, client relationships, billing, hiring, accounting, website …). I would also advise you to participate in activities with like-minded professionals.
What is the one most meaningful thing you ever did in your career?
I share some of my time and knowledge through volunteer work. In addition to my volunteer activities for actuarial organizations, I leverage my actuarial expertise to support community initiatives. It brings me down to earth, it allows me to open my mind to societal issues and to be useful to my community. For example, I assisted in developing evaluation metrics for a holistic program aiming to improve the quality of life for underprivileged people in my Muslim community. I also perform financial management and accounting duties for a multi-generational housing project.
What do you gain from your extensive volunteer contributions within the actuarial profession?
It provides me with the opportunity to work on current topics of interest with a group of engaged actuaries who bring different points of view, backgrounds, experience and knowledge to the table. It allows me to develop a network of actuaries who become my “go-to” actuaries for guidance and information. I also enhance my technical and analytical skills since discussions with these actuaries sometimes bring me outside of my comfort zone.
What skills do you find most useful when managing people?
I manage people the way I would like to be managed, i.e., with respect, compassion and humility. My goal is to create an environment where people love to work and where they succeed. Among other things, I make myself available, I share big picture information, I give clear directions regarding the deliverables while allowing room for creativity in the process, and I assist the people I manage with creating their career road map.
How do you manage your extremely busy schedule each day?
- I start early.
- I am present to what I am doing in the moment.
- I do not procrastinate.
- I manage and control the use of my own time, taking into account what is important to me.
- I block off time in my calendar to execute specific tasks, including personal time.
- I categorize and prioritize the emails I receive in order to minimize the number of times I deal with each one, responding immediately when possible.
What is your personal vision statement?
My personal vision statement is to “be CRISP”:
Creative
Responsive
Inspiring
Sensitive
Positive.
Every night, I reflect on the day that is about to end and I identify instances in which I showed these qualities. My goal is to embody at least three of these qualities each day.
Minaz Lalani is managing principal at Lalani Consulting Group, and is a member of the SOA Research Executive Committee.
Need more information on ERM and/or entrepreneurial actuaries?
Visit the Joint Risk Management Section and the Entrepreneurial Actuaries Section.
Save the date and learn more about the Enterprise Risk Management Symposium!
Interested in the Chartered Enterprise Risk Analyst designation? Visit their website.