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The Joint Forum on Actuarial Regulation (‘JFAR’) was established in 2013 and comprises the Financial Reporting Council, the Institute and Faculty of Actuaries, the Financial Conduct Authority, the Pensions Regulator and the Prudential Regulation Authority. The JFAR is a unique collaboration between regulators to co-ordinate, within the context of its members’ objectives, the identification and analysis of public interest risks to which actuarial work is relevant.
The JFAR sets out its collective view on current risks to high quality actuarial work in the Risk Perspective: 2017 Update (PDF)
The Risk Perspective identifies nine ‘hotspots’ where there is a perceived increase in risk to the public interest where actuarial work is central.
Political and legislative risk;
Market performance and uncertainty;
Defined benefit pension scheme management;
Technological change - automation and digitisation, Big Data, artificial intelligence and cyber risk;
Terrorism and Cyber Crime; and
The Risk Perspective is intended to raise awareness of the risks to and the importance of high quality actuarial work in mitigating the risks to the public interest. In today’s fast changing world where people are living longer, environmental concerns are rising and technology is advancing at an unprecedented pace, it is vital that actuaries focus on the right risks to perform their work to the highest quality.
JFAR also introduces an innovative approach to identifying risks to actuarial work, the Actuarial Risk Identification Architecture (ARIA). The ARIA enables JFAR to identify and review the macro environmental drivers, risks inherent in actuarial work and the market characteristics which currently lead to an increase in risk. The ARIA is designed to identify hotspots and interactions in a holistic and dynamic fashion.
The JFAR invites feedback by email to RiskPerspective@frc.org.uk and will hold stakeholder outreach events during 2018 to capture the input of practitioners and users of actuarial work.
In October 2014, the JFAR produced its first identification of risks to the public interest where actuarial work is relevant through its discussion paper Joint Forum on Actuarial Regulation: A risk perspective.
In July 2015, the responses to the discussion paper were published in its Feedback Statement: Joint Forum on Actuarial Regulation: A risk perspective. The individual responses and transcipts of the FRC hosted outreach events are here.
In December 2016, the JFAR published its first annual update (PDF).
During 2016 the JFAR undertook the following reviews:
DB to DC transfers following the introduction of the pensions freedoms (PDF);
Group think; and
General Insurance Provisions - the observations are contained within the 2016 update.