Estimating Bubbles

In a presentation for more than 200 actuaries at 'Actuarieel Podium" (actuarial Platform) on October 2 (2013) (Actuary Day) in the Netherlands, I tested the ability of Dutch actuaries to estimate the number of bubbles in a bottle of champagne.


Take the Test
Test your own bubble estimation ability. Think for a while:

How many bubbles are in a bottle of Champagne?

If you think you've got the right answer, check it by clicking on the picture below...

Conclusion 
If the order of magnitude of your answer was right: Congratulations!
If not, like most actuaries at my presentation, one thing is clear:

As actuaries we fall short in estimating bubbles!!!! (crises)

Key question is: why can't we estimate bubbles?

Short answer: because we have been only professionally trained in estimating relatively small numbers and small risks, not (systemic) crises.

One thing is sure: we need to fix this educational bubble-lack in our professional actuarial training.

Links
- Beekman Wines: Champagne - How Many Bubbles?
- Application of Actuarial Science to Systemic Risk Report (2013)
- Actuarial Viewpoints on and Roles in Systemic Risk Regulation
- Actuarieel Podium (Dutch)

Aftermath
49 Million Bubbles in a bottle of champagne may seem much, it's nothing compared to the U.S. Debt:



Learn more (in Dutch) on how we can do better as actuaries in the next presentation: 'From Backroom to Boardroom' (in Dutch) by Jos Berkemeijer

From Backroom to Boardroom (Dutch) from Jos Berkemeijer

The Life Expectancy Variance Monster

After 'age', what would be the most important explanatory factor with regard to mortality rates or constructing life tables?

As actuaries we've demonstrated our innovation capabilities by developing life tables not only based on 'age' and 'gender', but also (two dimensional) on 'time', 'generation' and 'year of birth'. This helped us to extrapolate future mortality rates in order to predict future longevity with more accuracy.

However, despite our noble initiatives, these developments turn out to be insufficient to put the Longevity Variance Monster back in his cage.

Modern 'life expectancy at birth' predictions for periods of 40 to 50 year ahead, lead to 95% confidence intervals of 12 years or more. Unusable outcomes .....

Let's not even discuss more necessary accurate confidence intervals of 99% or more ....

In our attempt (duty?) to moderate and diminish future life expectancy variance, we'll have to develop new instruments.

The more we know which risk factors 'are responsible for the increase in 'life expectancy', the better we can estimate and diminish future variance.

One of those new approaches is to calculate life expectancies on basis of postcodes.

This new insight can be helpful, but there's a much more important risk factor that has to be included in our life expectancy predictions to definitely kill the Longevity Variance Monster:

Self-perception of aging

In a 2002 research "Longevity From Positive Self-Perceptions" by Levy ( et al.) it became undeniable clear that:

• negative self-perceptions diminish life expectancy;
• positive self-perceptions prolong life expectancy.
  

Older people with more positive self-perceptions of aging, measured up to 23 years earlier, lived on average (median survival) 7.6 years longer than those with less positive self-perceptions of aging. This advantage remained after age, gender, socioeconomic status, loneliness, and functional health were included as covariates.

Top 6 Life Expectancy Risk Factors

Here's Levy's top 6 list of risk factors on life expectancy (ordered from greatest to least impact on life expectancy):

1. Age
2. Self-Perceptions of aging
3. Gender
4. Loneliness
5. Functional health
6. Socio-economic status

As we can not change 'age' nor 'gender', let's put some more research on the other risk factors.

Once we achieve to 'explain' the cause of increase of life expectancy on basis of 'new' (soft) risk factors, we - as a society - will also be able to manage life expectancy better (information, education, training, coaching, etc.).

In this way actuaries can help society so that people live longer and stay happy in good health. All on basis of of a sound financial pension and health system, as predicted life expectancy will show a smaller variance.

Help to kill the Life Expectancy Variance Monster.....

Happy 2011, with better expectations and smaller variance!

Sources/related Links:

- Why population forecasts should be probabilistic
- On line Postcode Life Expectancy Tool
- Longevity From Positive Self-Perceptions
- Predicting successful aging (2010)

Humor: Actuarial Advice Route

Actuaries have a great job. Giving actuarial advice has become 'boardroom art'.

Although actuarial device differs as much as actuaries differ, the route of actuarial advice is - not surprisingly - mostly the same....

-- click to enlarge picture --

Keep enjoying your job as an actuary!

CERA: Actuaries on a new track

Actuaries are taking a new step towards professional risk management.

After the U.S. started in 2007 the initiative for this new direction in the actuarial profession, this month the Society of Actuaries (SOA) signed a treaty with 13 other international actuarial organizations to establish the Chartered Enterprise Risk Analyst (CERA) as the globally recognized enterprise risk management (ERM) credential.



The designation will recognize actuaries globally who meet stringent education requirements in ERM and are governed by a strong code of professional conduct. The “CERA” letters after an actuary’s name indicates to the business world that there is no other type of risk professional better equipped to take a 360-degree view of an organization’s risk profile.

CERAs don’t merely speak to what we can lose, they focus on what we can gain.

Enterprise Risk Management isn't just about dealing with financial risk. ERM is an attitude, a new way of thinking. CERAs will become the boards most reliable advisors, they can't do without.

Sources:
- SOA
- CERA

Humor: Actuary Solves Credit Crisis

One upon a time there was a small village depending on only one source of income, tourism... the only problem was - due to the 'crisis' - there were no tourists left...

Every villager had to borrow from an other in order to survive.. several months passed .. everyone felt miserable.

One day a cost conscious actuary, visiting a Risk Conference nearby, arrived in the village.

Heading for a cheap overnight stay, he booked a small room in the only available local hotel. He paid in advance with a 100 dollar note and went to his room to prepare for the conference.

Before the actuary could unpack his bags, the hotel owner had already taken the 100 dollar note, heading his way to pay the butcher.. to whom he owed precisely 100 dollar.

The butcher, in his turn, immediately ran off with the 100 dollar to see the local farmer and paid his debt for all the meat he'd been supplied with...

With the same 100 dollar note, the farmer immediately paid the seed salesman who, right at that time, was visiting the farmer to collect the unpaid 100 dollar bill.

Back in his hotel, the seed salesman closed the circle. In order to settle the hotel bill for that night, he dropped the 100 dollar note on the counter. Just at that moment, the actuary - who'd come down to tell the hotel owner that he didn't like his room - arrives at the counter, picks up his 100 dollar and disappears.

Nothing was spent,
nothing was gained,
nothing was lost.
Nonetheless, thanks to the actuary, nobody in the village had any debts!

Moral
This story shows why it's important for actuaries to attend Risk Conferences and illustrates how actuaries can actively contribute to solving the credit crisis.

Original Sources: Free after newciv, Dutch source Aardbron

Why an actuary succeeds!

What's that special gift an actuary has, that he always succeeds?

Never mind how complex the situation, an actuary always has that one missing magic equation ready to astonish his audience....

Some accuse actuaries of always talking their way out of a problem. They stress that actuaries misuse their formulae to force decisions 'their way'.

We all know that's not true. Yes, an actuary always survives and actuaries are not biased or irrational.

It's the study, our experience and our trained 'gut feeling', that makes us succeed, as the next cartoon shows!

(Click [twice] on the cartoon for the enlarged version, to get a clear sight at the equations)


So now you know why an actuary is not easily daunted!

Pension Fund Death Spiral

In a very simplified model (Pensions Dynamics, PPT), professor of investment strategy, Alan White, concludes that defined benefit pension plans probably cannot succeed on the long term.

Death Spiral
White shows that every pension fund with a non risk-free asset approach, will eventually encounter a “Death Spiral” which will lead to the collapse of the fund. The only solutions are:

• Raising contribution rates
• Lowering promised pension benefits.

Assumptions
All conclusions are based on the next summarized main assumptions:

• Compensation growth: 2% per year
• Pension contribution: 15% of yearly compensation
• Yearly retirement income objective: 70% of his final salary
• Risk-free rate of interest is 3%;Risk premium on the risky assets: 3%
• Annual volatility of the risky assets: 15%
• Time horizon: 100-year
• Risky Assets investment part : 60% of the portfolio
• Corresponding final pay pension defined as 20 year annuity
• Required minimum average Pension Fund asset value in steady state
  - at 3% return: €/$ 47,200
  - at 6% return: €/$ 23,600

Frequency Distribution Outcome
One of the most striking outcomes of this study is the fact that as we look farther in to the future of the simulated pension fund, the amplitude of the frequency distribution of asset values appears to be dropping to zero. The chance that (average) asset values will be between $10,000 and $100,000 gets smaller and smaller.

The reason for this is that the probability of very high asset values and the probability of entering a collapsed state (the collapsed funds are not shown in the next figure) both increase as we expand out time horizon. As a result the probability that assets remain in the intermediate interval, is reduced.

Another interesting facts are:

• Asset values appear to become more sustainable as the part 'risky assets' increases
• Collapse rates for growing pension funds are, (almost) independently of the asset mix, negligible.
• Collapse rates for more mature (steady state) pension funds are substantial and increase to deadly percentages as the time horizon increases from 50 to 100 years.

Remarks
Although Whites model is perhaps oversimplified and can be easily criticized, it clearly shows the essential principles of running a pension fund.

In a commentary, Rob Bauer (ABP, University of Maastricht) argues White's conclusions. Nevertheless, interesting stuff, that stimulates actuarial insight.

Links
Interesting corresponding links:

• Longer Horizons Can Handle Riskier Holdings
• Stochastic Interest rate models (2008)
• The calculus of retirement income

Paradox of Cautiousness

Actuary, Accountant, Supervisor or Consultant, life is full of paradoxes....

Let's examine a very interesting statement made by the respected President of the Dutch Supervisor DNB, Dr. A.H.E.M. Wellink, in a recent interview on Dutch television (2009;Pauw & Witteman, in Dutch):

"If the (economic) growth fall is between minus 1 and minus 2, and I think it is minus 2, I would express myself in a very subtle and nuanced way, by saying:
"I think it's closer to minus 2 than minus 1". And then, if you listen well, you would know it's actually minus 2.
To be sure, we - me and my (supervisory) colleagues - say it in a more cautious way ..."

What can we conclude from this short prodigious statement?

Communication fuzz
What first becomes clear in this statement is that responsible board members of (local) supervisors, due to media attention and unrealistic expectations, are forced to communicate in euphemisms or coded idiom.

As a consequence, professionals as well as the public, can only have a best guess at what the real message could be, with communication fuzz as a result.

President Wellink should be allowed to simply state that what he actually means, in this case:
"I think the economic growth will be around minus 2 percent".

Diferent meaning
Second problem with trying to communicate in a 'cautious' way, is that the word 'cautious' has a different meaning for different stakeholders.

For example: an investment will have a different risk profile for the investor, the asset management company, the company's shareholder or the supervisor. Each of these stakeholders will therefore have their own definition of the word 'cautious'.

As a consequence, last but not least, it is the question whether it's 'cautious' if you state the negative growth higher (less negative) than what you really think it is. Most people in the public domain will probably qualify this statement as incautious.

Paradox
Life of supervisory board members is not easy. They are confronted with a persistent paradox, the Paradox of Cautiousness.

If board members report 'early warnings' they are treated as 'messengers of bad news', accused of market interference or irresponsible actions and launching self fulfilling prophecies. On top of this they may get fired or even be held responsible for the negative financial impact of their statements.

On the other hand, if they don't report their findings public and try to solve the problems in a diplomatic way behind close doors, they may get accused afterwards for not having warned in an earlier phase.

Life is full of risks, not only financial risks, but also the risk of the consequences of (non) communication.

Actuaries
As actuaries, we're often in the same difficult situation as President Wellink. We also have to act cautious, realize our 'cautious' advise regarding the Pension Fund, could implicate an 'incautious' advice for the sponsor or the participants of the pension fund.

Not only actuaries, but also accountants, investors or - in short - everyone who has an advisory or controlling function, have to deal with this 'Paradox of Cautiousness'.


Risk Escalation Management & POP
In most cases the Paradox of Cautiousness can be avoided by proactive Risk management.

If (recalculation of) your Risk Management Models or Scenario's indicate a significant change of risk in the (near) future, immediately take action, propose measures and demand adequate decisions. Don't postpone your actions in order to be sure of the observed changes nor on the advice of friendly 'experienced' stakeholders that tell you with a smile there'll be no problem at all and you're overreacting.

Once you're in the phase where incidentally ad-hoc repair management by the board has failed and serious structural repair management scenario's have to be put on the table, you're too late!

You'll have past the so called point of no return - in this case - the Point of Paradox (POP), you're caught in

The Paradox of Cautiousness

If you put your warnings and proposals in this phase on the table, stakeholders will tell you they felt caught by your actions. Soon board members and other stakeholders will blame you for not having warned them earlier and will question your accountability. Before you realize what's going on, you're in phase three: Crisis management, your head is on the block.

Rules of Thumb
From Wellink's simple example, we may conclude several rules of thumb about being cautious:

• Dimension cautioness
  Never state that you are cautious in general, always dimension cautiousness with regard to the different stakeholders and the type and size of risks.
  
  
• Early stage warning
  In line with "good governance" always try to warn in an early stage, before the Point of Paradox (POP) when things are (about) to move in the wrong direction, but are still manageable. Warn in a transparent way, open and visible to all stakeholders. Arrange a board level discussion and make sure you've got a completely free hand in what and how you put your findings and vision on the table.
  
  
• External Advice
  Make sure that you're allowed (and have budget) to hire external consult whenever you think this is necessary. In case of discussions or decisions that may have substantial financial impact, don't doubt, but hire external legal or financial consult to assist you and to validate your findings.
  
  
• Contract & Access
  Make sure your contract includes conditions that prevent your employer from firing you during your report findings period and make sure you have (formal) access to any (supervisory) board member when you think this is opportune.

After this heavy stuff, let's conclude with a nice parable...

Parable of the Cautious Actuary
There was a very cautious actuary,
who never laughed or cried.
He never risked, he never lost,
he never won nor tried.
And when he one day passed away,
his insurance was denied,
For since he never really lived,
they claimed he never died.
- Unknown -

Actuary Thyl Ulenspiegel?

Anyone with a little mother wit knows one plus one equals exactly two, not more, not less.

Smart people, like the historic Thyl Ulenspiegel, made a profession out of counting. Every time bystanders gave Thyl the choice between a rix-dollar (a 'two and a half dollar' coin) or 2 dollars coins, he opted for the 2 dollars.

"Two is more than one", Thyl - clearly not an actuary - used to say. People felt pity for 'poor Thyl Ulenspiegel'. That someone like him could be that stupid!


Modern Counting
Today (2009) little has changed. Modern gurus made us believe that, through M&A's, synergy, cooperation, in or outsourcing, the whole becomes greater than the sum of the parts. One plus one could easily equal three or even more.

However, research has shown that the majority of mergers and acquisitions fail. Hindsight shows that one plus one doesn't add up to three, but only to one point five, or in some cases even to zero. Cause? Synergy benefits and future market are extremely overestimated and cultural differences, despite continued 'slippery warnings', remain underestimated.

Shareholders and management of an acquired company cash their future notional profit surplus, that -at first - appears in the balance sheet as 'goodwill' and than subsequently, over the years, becomes visible as a loss in the P&L.

However there are other modern counters - not actuaries - that can even do better, as will be illustrated next.

Some youth memories never fade..
As a young boy I discovered an unstamped stamp in the attic of our house.

The stamp was worth 50 billion Deutsche Mark, dated 1923.

Completely overwhelmed I tumbled down the stairs to report my parents we'd become billionaires.

A few minutes later, completely disillusioned, I'd learned a new word: Hyperinflation.


Hyperinflation
The hyperinflation back in the twenties of the the last century is only a trifle of the current (hyper) credit inflation:

U.S. $ 1.000.000.000.000

A trillion dollars, the Fed 'invests' in buying up debt. By coincidence this equals the amount of money that Europe, the G20, will be pumping in the economy.

For all of 2009, the U.S. administration probably needs to borrow about $2 trillion. That money doesn't really exist, but that's no point of concern! The debt crisis is simply solved with more debt. What was not legitimate for the banks, is now legitimate for the 'bankruptcy proof government'. Frankly, my intuition really starts to falter now ...

Russian Credit Roulette
Modern Ulenspiegels, playing a variant of 'Russian Credit Roulette', have now left the roulette tables. With borrowed money, doubling their bet for five consecutive times in a row, they bet and lost on 'credit red'.

Instead of taking their loss, the government has taken their place at the table and decided to double the bet on red for the sixth time in a row, now playing for a trillion dollars.

All of this under enhanced risk management, governance and supervision of course.

To get a really confident feeling: the probability of consecutive six times black seems both rational and intuitive almost impossible, but is in any case less than the "safe" smaller 2.5% ruin probability (2.5% probability of insolvency) of a pension fund. Some people state there's light at the end of the 'financial crisis' tunnel.

Now let's hope this light is no oncoming train and roulette tables turn out to have a memory after all.

Maybe it's time actuaries get involved in government finance....

Hoax Investment Management

You and I always wanted to believe that in banking or investing business, with an overdue of compliance and regulations, we could trust on management, based on highly ethical standards.

Geraint Anderson – a successful star analyst -makes an end to that believe.

Anderson was so outraged by the greed and lust of the Square Mile that he resigned from his immoral job.

After his resign he published a book - Cityboy - about the excesses and wrongdoings within London’s financial market.

Anderson truly believes the credit crunch is a direct result of short-term gambling and the bonus culture.

Investment Technique Examples

Now, as interested actuaries, let's dive a little deeper.

To 'level up your actuarial skills' and to 'open up your eyes', just two simple examples Geraint Anderson gives of the sick making list of secret modern investment techniques:

• Pump & Dump
  Manipulation of shares is chiefly done by small teams of hedge fund operators spreading false rumours. Day in, day out, you see the shares rise slightly. Rumours go round that a certain company will be taken over. These nasty little toerags work in little groups, on mobiles, and it’s very difficult to prove who started the rumour. The shares would go up by 30%. Then they would sell.
  
  
• Trash & Cash
  The opposite of Pump & dump – Trash & Cash – also happened quite a bit. You would spread false rumours that shares were going down. At which point the hedgies would “short” the shares, namely borrow them from, say, a pension fund, sell them, watch the rumour do its work and then buy them back.

The reason why these techniques are so nasty is that they lead to financial instability, according to Anderson.

Hoax marketing
The most frightening aspect is however that no matter how strong the design of a regulation or supervisory system, it can not prohibit the negative effects of the above mentioned hoax marketing techniques.

As our investment models become more and more sophisticated, it looks like 'informal market information' is the only option to get an outperformance and 'make the difference'. At least in case of a a 'short performer'.

Solution
The solution to this problem is therefore very simple:

Set out a long term investing strategy, so you don't have to worry about (short term) volatility and never ever act on rumours or incidental high risk opportunities in the marketplace.

As actuaries - for decades - we proved that we could manage the right side of the balance sheet long term. Now let's apply that same kind of advise and strategy on the left side of the balance sheet. Success!

SOURCE

Wiki Book of Actuarial Science?

Wikibooks is great!

Wikibooks is a Wikimedia community for creating a free library of educational textbooks that anyone can edit.

Since the start in 2003, Wikibooks has grown to include over 35000 pages (year 2009) in a multitude of textbooks created by volunteers.


Chess
A great example of Wikibooks is the Wikibook Chess.

In exactly 12 chapters a variety of aspects like, Playing, Notating, Tactics, Strategies, Openings and Endgames, are clearly explained.


Wikibook of Actuarial Science
There is also a Wikibook of Actuarial Science. Although all the required chapters of 'Actuarial Science' are already there and structured, the content has to be taken care of.

So, if you like to contribute? Work for voluntary actuaries!

How Defined Benefit Plans work(ed)

Pension plans suffer, from a rare disease....

UK
According to IPE more than 90% of UK Defined Benefit (DB) schemes are underfunded. The aggregate funding position of almost 7,800 schemes reported a deficit of £218.7bn at the end of February 2009.

NL
The situation in the Netherlands is hardly better.Figures from the Dutch regulator,DNB, show around half of the country’s 650+ pension schemes are under-funded. The Dutch government has extended the recovery period for pension funds from three to five years. The main question is: "Is that long enough?"

How Defined Benefit Plans work(ed)


Pension funds, especially DB schemes, have to face that their worst dreams, a complete doom scenario, is becoming true :

• First the subprime market collapsed
• Then, as trust broke down, the stock market went down as well
  
• On top of that Interest rates dropped dramatically

Titanic lessons
Just like the 'unsinkable' Titanic was protected by compartments, we had protected our pension schemes with diversification. And just like the Titanic, we actuaries, asset managers, and quants made a fundamental mistake. We underestimated the correlation between the different compartments (bonds, subprimes, stocks). One hit in the vital front compartment was enough to draw our pension dreams to the bottom of the ocean.

Optimistic view
But let's not stay pessimistic.

Do you know how long it took the market to recover after 1929? .....

ONLY 25 YEARS!

Global Investment Returns Yearbook 2009
And there are more reasons to stay positive about the equity results on the long term, as is shown in the very interesting downloadable Credit Suisse Global Investment Returns Yearbook 2009, that analysis returns from 1900 until the end of 2008.


As this yearbook shows us in more detail, it is only a matter of statistical faith, that equity performance on the long term will recover.

So the only thing we can do is, just like a sick patient: stay cool, rest (don't move), don't panic and wait until trust and the markets recover.

God bless you....

Langton's Actuarial Ant

As an actuary, you believe in the consistency of your risk models.

You might think that with 10.000 observations you've got enough stuff to present a consistent statistical model with realistic expectations, variances, etc.

You are aware that the output of your model depends on the quality of the data and the assumptions. In your advice you try to communicate all that to the board in order to support sound and responsible decisions.

In other words, you've got a consistent model and, as an actuary with a professional and consistent life-philosophy, you have everything under control. No great changes will take place?

Well, 

you're probably wrong !

Just like our models, we actuaries, are not consistent

Even if we (or the risk reality we try to model) act in a stable consistent way, we (or risk reality) keep interfering with our environment and our environment responses to us.

At first this response seems meaningless and of no value. You think you're consequent and your work and achievements in life seem relatively stable, perhaps a little bit chaotic and of no great significance. But in repeating your proven receipts, way of doing or procedures endlessly, eventually

Something will change
This change often will not appear as an evolution in your life, but as a kind of revolution, out of the blue and most often unexpected.
Suddenly, just like in the credit crisis, there's an emerging situation. The way you always did it, doesn't turn out right anymore. Your model crashed, you crashed and there was nothing you could do about it. You couldn't have foreseen it, you could not have prevented it the classical way.

That's why we always have to add some non-classical extra 'common sense' safety margin thinking in our models.

Progress?
The other side of this is also true. Fore example, when you study, you'll probably, once in a while, think: what progress am I making?

But don't worry, if you keep on your track, there'll be a day your future suddenly comes to you (out of the blue: as a kind of emergent property) instead of "the you trying to make your future" in this Game of Life.

A good demonstration of this principle is

Langton's ant Langton's ant is an virtual ant that starts out on a grid containing black and white cells, and then follows the following set of rules. If the ant is on a black square, it turns right 90° and moves forward one unit. If the ant is on a white square, it turns left 90° and moves forward one unit. When the ant leaves a square, it inverts the color. The result is a quite complicated and apparently chaotic, but relatively stable, motion. But after about 10.000 moves the ant starts to build a broad diagonal "highway".

So keep in mind "Langton's Actuarial Ant" next time you design a new risk model.

Anyhow, stay on your track as an actuary and remember, whether it's you in life or your models, someday there'll be

a collapse of chaos

The Actuarial Black Eye

In his blog David Merkel gives a fabulous book review of the book:

While America Aged

The book and blog show that actuaries (and accountants as well) were not disciplined enough to resist politicians pressure and large companies board (and shareholder) short-term result demands. As a direct consequence those companies got into serious trouble.

Stick to one's guns, and keeping a save eye on the future, is one of the essentials of the actuarial profession.

Training (not just study alone) in giving the right push back on board level, should therefore be an obligate part of the education (and accreditation) of actuaries and accounts.

As (UK) Sir Derek Morris stated in his "review of the actuarial profession: interim assessment" (2004):

Too much has been expected of actuaries and, explicitly or otherwise, too much has been promised by them.

Clients have looked to actuaries to provide certainty, and actuaries have often appeared to provide it.

For Dutch actuaries, see also Willemse and Wolthuis in: "On the practical meaning of probability based solvency".

Actuaries are almost just like real human beings: after a few years successful studying and modeling, they gain confidence. They start to believe that reality will also act according their models. Moreover, they might get overconfident and think that their view and expertise on reasonably well predictable issues like life, death and disability are - with the same amount of certainty - also applicable on other issues like 'inflation' and the development of the 'stock market'.

This it typically a case of :

That what develops you, eventually might kill you

Practice hasn't shown that good actuaries are,by definition, also good weatherman.

The book also shows that self-regulating without clear targets and constraints is a fairy tale.

Keep in mind the Mongolian Proverb:

Of the good we have an understanding,
for fools we keep a stick upstairs

Success in being a PBA (Push Back Actuary)!