Coping with uncertainty:aporia and play in actuarial and financial practices

Abstract

This thesis aims to bring into sharp focus a contradiction that seems to persist in actuarial and financial practice. Specifically, how efforts to manage the uncertain and potentially catastrophic future, via actuarial and financial calculative modeling, fail precisely where they succeed. The purpose is to disclose that the problem with such efforts is not that they are not yet scientifically sophisticated enough, nor that they frequently lack the intuitive judgement which experienced practitioners can bring. Rather, it is that our certainties, which may have either a technical or judgmental origin, are always and already permeated by uncertainties, and vice versa. Thus, what this thesis aims to show is the radical and inescapable entanglement of certainty with uncertainty, or of the technical with the social, which is not simply complementary or oppositional, but in a more fundamental way, aporetic. This aporetic entanglement is conceptualized within the thesis as an ongoing play of difference. Specifically, a play that is ontological and central to what sustains actuarial practice exactly as that. The thesis consists of three papers. The first one focuses on the financial markets and aims to disclose, following a Heideggerian analysis, how investing is ontologically dependent on a prior understanding that dictates what counts as significant, or not. In this respect, financial markets are conditioned not just by the social/technical entanglement, but also by a further entanglement among different styles of understanding. The second paper focuses on the liability side of insurance companies and argues that the so-called financialization of insurance liabilities (i.e., the requirement for a market-consistent valuation of them) does not uncritically expand financial economics (i.e., practices oriented towards the market with a dominant technicalizing aspect) at the expense of actuarial logics (i.e., practices oriented towards the underlying liabilities with an effective contextualizing aspect). Rather, a Derridean autoimmunity process is revealed – one that “auto-deconstructs” the financial sovereign of the market-consistent valuation into its actuarial “other”. The third paper focuses on Solvency II, the new regulatory framework for EU insurers since 2016. By taking a close look at the quantitative and qualitative requirements of the new framework, the paper claims that the regulatory text and its accompanying algorithm can never be made unambiguous, or free from fundamental paradoxes. However, instead of adding confusion, this paradoxical quasi-structure ultimately increases the possibilities for understanding the subtleties of the insurance business and its solvency issues. In this context, the paper reconsiders performativity as a play of differences – a rethinking that focuses more decisively on not knowing, rather than on what can be rendered knowable.