Q: You developed CRisALIS, a new method of analyzing and understanding risk. What have you learned about risk?
The thing about risk is it’s a feature of society—it’s always there. At Milliman, I think a lot of our perspective on risk comes from thinking about the fact that risk comes from people and what they do, how they interact, all that kind of stuff, and that’s really why CRisALIS is unique. We’re actually thinking about how risk really works in the big wide world rather than starting from a false premise, pretending that everything’s really simple so we can stuff it into some sort of a model. That’s really where CRisALIS is quite different than how most people tackle risk: It’s reality-based.
Q: How do you do that? How do you make a more complex model and still get something that you can use to predict things?
The funny thing about complex systems is that very often the rules underneath them are quite simple. And it’s the very simple rules that interact and create some fantastically complex behaviors which you basically can’t understand. You think about the weather. As you prepared to go out today, how did you decide whether or not to wear a jacket? Did you look in your table of statistics to determine whether there was a 3% chance of rain today or did you look out the window and check what the sky looked like? And it’s kind of obvious, really, that just as with weather, you learn what patterns are and how things behave in these really complicated systems. What we’re really doing is saying let’s be brave and go back to basics. The world is a complex system, but we can work out what the really simple rules underneath all of that might be and then create the complex behaviors that you see as the end result by sort of doing some analysis.
Q: You make it sound quite simple. Why haven’t other people done this before you?
Good question. We asked ourselves this a lot when we thought we’d found this fantastic idea. I suppose the problem is that it involves joining together maybe a dozen different areas of science, and science is quite confined by discipline. And so you’d read a book on something to do with sociology and it sounded fantastic but you wouldn’t really know how to translate that into an economic capital model for some insurance company. And so what we’ve done is gone round and really thought hard about all the different features of how risk behaves in the world. We’ve looked for the most appropriate scientific techniques to describe each of those pieces, and then we really worked hard and expended an awful lot of brainpower on how to join those things up. So I think it’s the joining it all together, which is what Milliman’s done, which is quite unique.
Q: Milliman has a unique structure in terms of the freedom it allows its different divisions to have. Is that an accurate assessment, and if so, did that influence the development of CRisALIS at all?
Absolutely. At Milliman, it always feels like as long as you can talk to people, you can find some sort of common language—people are always very interested in exploring new ideas that might help their particular practice. At Milliman, you have the ability to just sort of try stuff, see if it works. And if people like how something is developing and they think it’s something that they could use for their clients, then people are very interested in supporting it and exploring it.
One of the great things we’ve found with CRisALIS is that the methodology is very generic. It doesn’t have to be about life insurance. You can do it with clothes retailing, you know. It works on anything. So when we were talking with people around the firm, we kept saying well hey, this would work in healthcare, it would work in property and casualty, it would work on employee benefits, it would work anywhere. All of a sudden we had lots of interest from colleagues in other practices who put new ideas into the pot so we could develop the process. I think the way Milliman works really does help this kind of project, where people feel able to contribute and willing to contribute. There are no real boundaries at Milliman. And I think that’s something you wouldn’t find in another actuarial or a consulting firm where people just think within their own silo.
Q: One aspect of CRisALIS is something called a risk exposure map. Tell me a little bit about that.
If you imagine watching your favorite film and then trying to explain to someone what the story is, it’s an absolute nightmare trying to communicate that with all the plots and subplots. The risk map is a way of actually visualizing that film on a page. It’s a way of writing down all the key things that come up in the film and drawing connections between those things so that people can see them.
The risk map uses something called cognitive mapping, and it’s a tool that scientists have developed to try and really capture what people are thinking and how they’re structuring it. And it’s effectively just a big visualization of the story. By having it all in one place, all on one page, you can see the whole story, check that it works. You don’t have to absorb the whole thing at once.
Of course, the really clever bit that no one else has done before is the way in which we can actually mathematically analyze that story to find out what’s important in it.
Q: So it’s a merging of quantitative and qualitative analysis.
Exactly. It’s a way of capturing the stories and then using some numerical techniques to work out what the key themes are. And it’s quite powerful. In an organization, we would interview maybe a dozen or so senior people, capture their chapters of the book, if you like, and when you put it all together it tells a story that they wouldn’t necessarily each have seen. And if each of them is contributing something from a different perspective, they all have a different political agenda or they have a different view on life, and we can actually stack all of those chapters of the book together and play back to them what the actual story looks like.
Q: Do you work with people outside Milliman to develop products like CRisALIS?
I work with a lecturer with the University of Bath, from their business school in their strategy area—he’s an engineer by background. And then the university has co-developed sort of an educational center, which has been progressing some of the ideas that we’re looking at. So we’re effectively driving a whole chunk of research, which is exciting from both an academic and a consulting point of view. So it’s not all just pretty pictures. It’s actually got a lot of academic rigor behind it as well.
Q: Is that typical of how your area at Milliman works?
I think what we’re trying to do for clients is really bring a combination of things which are genuinely cutting-edge sort of thought leadership, things they won’t get anywhere else. But we also want to deliver that to them in a way that a) isn’t scary and b) makes sense—and that they can do within a sensible kind of budget, you know, something that makes a practical contribution to their business.
Q: Do you find that Milliman has a strong reputation within those academic circles in terms of being a partner for this type of work?
I believe so. By having good intellect within the firm, we’re respected by academics. And then also we bring a business wrapper that goes around those thoughts so that it’s deliverable to a client as well.
Q: It sounds like you’re providing a service to the academics by providing a little engine for their research.
Absolutely. Some people think that their teachers like to just sit in a dark room somewhere, but actually they love their ideas to get used in the outside world. It’s quite hard for them to do that. And, of course, working with a firm like Milliman enables them to test a great idea in the real world with real people.
Q: Do you sense that there’s any change about the way people think about risk or the way people act about ideas about risk?
Maybe. I think sometimes people have short memories, which is part of the problem. It’s something we’re really bad at as a species.
Q: What is the best thing about your job?
I think that one of the best things, really, is the freedom we have to create solutions that genuinely push the frontier of knowledge—and at the same time bring a lot of value to a lot of people in real businesses. I think that’s an amazing thing we do here. You can sit here and think about how to solve a real problem and go ahead and deliver that solution to a client.
Milliman seems to really foster this kind of client focus, you know. People have to go the extra mile to deliver some value for a client. And if it doesn’t add value, we don’t do it.
Q: What brought you to Milliman?
Before Milliman, I’d spent 15 years working in one organization and had pretty much done every job in it. I was looking for a way of applying 15 years of business knowledge in some other context. And then there was Milliman—which offered me a chance to come in, shake something up, create something. And so I suppose that was the initial attraction, but to be honest, even nearly five years later, the level of enthusiasm hasn’t diminished, and we have created lots of stuff and we have grown a lot, but there’s still more to do. So maybe change is a never-ending thing at Milliman.
Q: Do you have a team of people you work with?
We try to have everybody working on everything. It’s a very, very talented bunch, very bright people, people I like to work with. They’re genuinely nice people as well with a diversity of interests and cultures. My work tends to be very international, so I work with people from literally everywhere: Asia, Australia, Europe, America, and that’s really good fun. You get to interact with people who have different perspectives on life, but who share a sort of common thread, which is Milliman, sort of pulling everyone together.
Q: Is there a skill that you wish you had now that you’re doing this work?
I suppose 20/20 foresight would be fantastic and it’d make risk management a whole lot easier.
Q: What’s a career goal that you still haven’t accomplished that you’d like to before your career is over?
The ideas that we’ve been developing, underpinning this sort of fundamental rethink of risk, well, we’ve actually started writing a book about that. There’s a publisher in the U.K. that has approached us. So in parallel with all the other millions of things we’re trying to do, that is something that I would love to finish and actually say yeah, we wrote the book about something that mattered to a lot of people.
Q: It’s the first day of work for a new employee in your office. What advice would you give him or her?
I think the advice would be to talk to people, ask for help, get involved in whatever you can, be the best you can, and have fun and basically try and make a difference. I think at Milliman that’s one thing that really seems to go a long way. Try and make a difference to the firm or your career or the client. Do something that makes an impact.
Q: It sounds like there’s a lot of focus on big-picture issues. Would you say that’s accurate?
I think that’s true. And there’s a lot of focus on how to be a good consultant, how to understand what your clients are looking for, how to present things in a way that resonates with them. And so there’s always those softer skills being talked about. And whenever you get together in groups of consultants or staff within the firm, I think there is a lot of discussion about how to make sure that what we’re doing is relevant.
At Milliman, we try to think about what the industry needs, push the boundaries, challenge clients, help them kind of better themselves. I think it’s really quite a healthy focus, you know. It keeps us fresh, keeps us innovative.
Q: People talk about this issue of work/life balance, that life can’t just be all about work. Can you tell us about how you see work/life balance as it applies to your life and at Milliman in general?
This was quite a strong attractor for me joining Milliman because I think a lot of consulting firms treat their employees as fairly expendable assets. They just kind of beat you until you bleed and then they just hire another one. Milliman’s perspective is quite different, and I think they respect that people sometimes draw their energy and strength in doing other stuff. It’s understood here that if there’s a big project, then absolutely it has to get done. But my experience has always been that if you set your own goals and you’re honest with yourself, then you can set those boundaries and people at work quite often work around that.
I've got a young daughter and a wife and I quite like seeing them in the evening. I don’t really want to be in London until 9:00 at night. It’s a two-hour journey each way going to work, so for me it’s quite a big deal to make sure I get back at a good time. And I think in the whole four years I’ve been at Milliman, I’ve very rarely missed my daughter’s bedtime. I try and get back before 6:00, say, so that I can have a play with them, have dinner with them, whatever it is. Weekends we try and keep days clear.
There’s always going to be stuff that comes up, but pretty much I think we would say we just sort of protect that time. And then I just work really efficiently the rest of the time. So I will absolutely get everything done, everything on the list will be checked off by the end of the day.