An element in driving life financial transformation in your organization is to determine the optimal balance between production costs, model precision and ease of maintenance of your models. There’s a very real trade-off between these considerations, and no universal right answer that’s applicable for all. You can, for example, make a model faster by introducing approximations, or by using less transparent but more advanced algorithms. But is the cost of the trade-off worth the extra speed?
In this article, the fourth in our five-part series on life modeling and technology, we’ll explore the three key factors that will help guide your decisions on models and model platforms.
People: The greatest challenge
Once you have explored the impacts for your organization in balancing your production costs, model impact and development costs, there’s a further complication: your people. The people side of development is traditionally the greatest challenge. A dedicated team of highly skilled modelers are essential to carry out updating and maintenance work on the models.
Efficiency in development is key to getting the most from this scarce resource. Every modeling team would, without hesitation, welcome the support of extra people. So how do we ensure we get the best from the talent we have — and more importantly, allow them to do interesting and challenging work, so they grow and stay with the team?
Fortunately, the solution to improving the modeler’s experience doesn’t have to be doubling the size of your team. Rather, it’s an additional positive outcome gained when you implement an integrated version control system to address the business need for control, governance and auditability within the model development cycles. With an integrated version control system, such as RAFM Team Edition, users can check in and check out the right models, compare and merge their changes in, and link those changes to the work items assigned to them.
When coupled with vTest, which tests the models automatically for unwanted side-effects, any problems can be rapidly identified and backed out. The impact of that level of control and governance is: more junior staff can be trusted to undertake the work and to learn; there’s a reduced dependency on the model steward; and there’s increased fluid working, without Friday-afternoon bottlenecks.
All this improves the lives of the modelers, the efficiency of the work and the auditability. Now you can link back from the model-change run in your Analysis of Change to the model changes themselves, the person who made the changes and why those changes were made.
So what next?
In the previous article in this series, we explored how focusing on business process excellence meant moving beyond merely automating tasks to streamlining entire business processes so they’re more efficient, effective and delivering consistent, positive outcomes. The next step in your life financial transformation journey is to optimize your models and platform to meet your specific needs.
That means taking a step back from where you are today, and auditing and costing your existing solutions to determine the optimal balance between production costs, model precision and ease of maintenance to meet your future business needs. And recognizing that’s something that you may need help with.
In the final article in this series, we’ll set out the key steps that you can take to actually realize life financial transformation in your organisation.
Further information on driving life financial transformation
To find out how we can support your actuarial team drive financial transformation, including modeling, automation and process improvements, please contact your WTW consultant, email us or visit RiskAgility Financial Modeler (FM).
Author
