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Upskilling and Structuring Teams forPredictive AnalyticsSOA Predictive Analytics Seminar – HangzhouTravis Short, FSA— 06 September 2018 —Pacific Life Re

The Actuary —What’s the future Actuary?‘The Once & Future Actuary’ – David Holland, 1997 SOA President– “In his 1949 address as the first president of the Society of Actuaries,Edmund M. McConney asked: ‘What are actuaries?’”– “The actuary in reality is a sound, practical rather than too theoreticalmathematician applying simple principles of probabilities to human affairsin the unknown future.”– “This is not a bad definition for 1949, or even for 1997.”– “The “Once and Future Actuary” is the model builder and manager, thefinancial architect and engineer, who can lay the foundation for asecure financial future. It is ours to invent.”– The Actuary magazine “analytics” word count: 0– The Actuary magazine “CD-ROM” word count: 3SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re2

Why ‘upskill’?—What’s your ‘data science’ value proposition?Amy Heineike, Primer AI:– “ “ data science is a bit of a hottopic, and so I think there are a lot ofpeople who think that if they can havethe ‘data science’ label, then magic,happiness, and money will come tothem. So I really suggest figuring outwhat bits of data science you actuallycare about.”Upskilling actuaries– What supports your goals, as an individual or asan organization? What’s your end game?– Shaping your path for upskilling and tools toconsider– Actuaries and non-actuaries working together,structuring teams for advices-aspiring-data-scientists.html SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re3

EY—on applications of advanced analytics for /Advanced analytics for insurance/%24FILE/Adv-analytics insurance AUNZ00000335.pdfSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re4

The Actuary: “analytics” word count2012“Advanced Business Analytics for Actuaries is aset of tools and techniques used to describe,predict, and recommend business courses ofaction based on consumer and distributorbehavior. It draws from many disciplines. It reliesheavily on vast amounts of data andcomputing power, statistics, modeling,optimization, dashboard and alerts, marketresearch, and clustering. Advanced businessanalytics provides employers with insightfuldecision making and affords the opportunity toassess a marketplace from a totally newperspective.”Actuaries in Advance Business AnalyticsWhite Paper, 2012, Lisa Tourville (Chair)SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re5

The Actuary: “analytics” word count2018: PA Pilot and Exam PA“Module 1: Predictive Analytics ToolsModule 2: Effective Problem Definition andProject ManagementModule 3: Data Design, Transformation andVisualizationModule 4: Data ExplorationModule 5: Feature Generation and SelectionModule 6: Model Development and ValidationWithin each module, there were knowledgechecks, exercises, end-of-module tests andopportunities to interact with other participants viaa private discussion forum. At times, the moduleinstructions would ask for specific interactions. Atany time, participants were free to use the forumto make comments or ask for help. Theparticipants worked on a variety of data sets,using RStudio to perform the analyses.”SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re6

Exam PA: Predictive Analytics2018 December Exam PA1. Predictive Analytics Problems and Tools (R, RStudio)2. Topic: Problem Definition3. Topic: Data Visualization4. Topic: Data Types and Exploration5. Topic: Data Issues and Resolutions6. Topic: Generalized Linear Models7. Topic: Decision Trees8. Topic: Cluster and Principal Component Analyses9. Topic: CommunicationThe PA Exam is administered as a five-hour project requiring analysis of a data set in thecontext of a business problem and submission of a exam-pa-detail.aspxSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re7

Exam PA Syllabus TextbooksFour textbooks on syllabus– ISL textbook – definitely (free online)– R for everyone – an option to learn R– Data visualization currently online http://socviz.co/– Regression modeling Might be a refresher option for you– Note that ISL and the regression book arealso on the pre-req Exam SRM syllabusSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re8

Intro to Statistical Learning – videos too!ISL Videos online– Your new commute material– iences/StatLearning/Winter2016/info– On YouTube too ( see -videos/SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re9

ISL: flexibility vs interpretabilityStatistical learning– You’ll learn a variety ofpotential models– How much does interpretabilitymatter? GDPR, right to anexplanation?SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re10

ISL: training and holdout testingModelling principles – The green training modelapparently has better fit –however that does not hold fora testing sampleSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re11

ISL: practical application of many models RegressionClassification– Logistic regression (left), lineardiscriminant analysis, QDA, KNN– Example here of holdout fitdiverging from the training fit for the‘green’ modelTree Based MethodsSupport Vector MachinesClassification– PCA, K-means clustering,hierarchical clustering,SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re12

Data Visualization: A Practical Introduction (ggplot for R)Data Visualization– socviz.co– ggplot package a go to for R– Note the map code below issimpler than code for visualsshown to the leftSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re13

The 2012 US Elections and Kansas – Red (Republican) i.e. Trump– Blue (Democrat)SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re14

Beyond Intro to Statistical LearningElements of Statistical Learning– From ISL: “ In this new book, we cover many of thesame topics as ESL, but we concentrate more on theapplications of the methods and less on themathematical details.”– ESL provides more thorough mathematical detailVarious other options– Machine Learning: A Probabilistic Perspective: Kevin P.Murphy– Pattern Recognition and Machine Learning byChristopher BishopSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re16

The Role of the Actuary in Data Science (IFoA ‘MAID’)We fed a machine learningalgorithm the text of our jobadverts and asked:(paraphrased) “what does anactuary need to become a datascientist?”– Python– R / SAS– Machine learning– Visualisation– maths– databaseSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re17

Data Scientist Skills, 4 Types (Udacity blog)“Finding a great data scientist involvesfinding someone who has somewhatcontradictory skill sets: intelligence to handledata processing and create useful models;and an intuitive understanding of thebusiness problem they’re trying to solve, thestructure and nuances of the data, and howthe models work, says Lee Barnes, head ofPaytronix Data Insights at business softwareprovider Paytronix ert-data-scientist.html nce-jobs.htmlSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re18

KDNuggets Data Science Tools Poll 2018“Finding a great data scientist involvesfinding someone who has somewhatcontradictory skill sets: intelligence to handledata processing and create useful models;and an intuitive understanding of thebusiness problem they’re trying to solve, thestructure and nuances of the data, and howthe models work, says Lee Barnes, head ofPaytronix Data Insights at business softwareprovider Paytronix ert-data-scientist.html SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re19

You said there’d be PandasR vs Python?Python Data Analysis Librarypandas is an open source, BSD-licensed libraryproviding high-performance, easy-to-use datastructures and data analysis tools forthe Python programming language.SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re20

Learn SQL & managing dataDefinitely SQL most of your data is likely in RDBMSwhere you’ll use SQL for storing,manipulating, and retrieving suchdataA learning option:https://www.w3schools.com/sql/Also check out Tidy data for R:http://vita.had.co.nz/papers/tidydata.pdf(or Pandas for Python)SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re21

Gartner Magic Quadrant for Analytics and BI Platforms‘Self service’ BI PlatformsAccording to Gartner: Tableau,Microsoft, and Qlik are leaders in thisspaceA somewhat mature space of softwareplatformsSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re22

Tableau: an exampleReviewing cancer claimexperienceTop half: A/E’s relative to an expectedbasis, with the A decomposed in to theunderlying cancer sitesBottom half: claim counts associated withA/Es, similarly decomposed by underlyingcancer sitesSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re23

Tableau: another exampleSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re24

Tableau example: cancer year over year correlation at Lag 1ReductionFollowed byReductionReductionFollowed byIncreaseSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsIncreaseFollowed byIncreaseIncreaseFollowed byReduction X-axis denotes themagnitude anddirection of yearon-year changes Y-axis shows thecorrelation at lag 1 More concentrationon the bottom halfEmpirical year-on-yearchanges are generallynegatively correlatedPacific Life Re25

Gartner Magic Quadrantfor Data Science and Machine Learning PlatformsMoving a lot year over yearKMINE, RapidMiner, H20.ai, Alteryx, SASall currently ‘visionary leaders’DataRobot not shown hereAnaconda – shown previously, populardistribution of Python, R, Rstudio,Jupyter SOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re26

DataRobot —Software helping to unite end to end processSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re27

rapidminer—Software helping to unite end to end processSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re28

KNIME —End to end for data analyticsSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPredictive modelling, just one piece of puzzlePacific Life Re29

Actuaries vs Data ScientistsRichard Warner LV on data scientists:“We’ve always had data scientists; they’ve beencalled actuaries and they’ve had tried-and-testedmodels for many years. But with the rise of bigdata, artificial intelligence and machine-learning,people are understanding that we can combinemultiple data sources of our own, as well asexternal data, and better target specific cases orniches, and get better insight, whether it is forpricing or countering fraud,” says Mr Warner.“Purple Squirrels” and rise-data-scientist-insuranceSOA Predictive Analytics Seminar 2018 Aug - Upskilling for Predictive AnalyticsPacific Life Re30