Off the Radar

n old expression goes that markets hate uncertainty. Stock prices often plummet before presidential elections, during geopolitical conflicts, or after unexpected news ranging from earnings shortfalls to global pandemics. An inversion of the adage goes that markets love uncertainty because perceived risk gives investors opportunities to demand steep discounts. The S&P 500’s recent price-to-earnings ratios suggest markets feel rather certain that the AI-powered future will be lucrative.

Ironically, Wall Street’s confidence resembles the self-assurance radiating from AI tools such as Claude or Gemini. Since inception, these large language models have been maligned for their sycophancy and tendency to hallucinate. But publicly traded insurance brokers may have thought they were the ones hallucinating when they collectively shed billions in market capitalization earlier in the year. John Divine unpacks the AI-driven uncertainty in his cover story, “Stock Shock.”

In this environment, former CAS president Roosevelt Mosely’s address to new members from the CAS Spring Meeting — which we feature in this issue of AR — particularly resonates. “The hardest questions are rarely about calculation,” he told attendees. “They are about judgment, weighing tradeoffs, and explaining uncertainty honestly rather than hiding it.” Two quartets in this issue of AR aspire toward such a mindset. Developing News provides its trademark measured discussion of four hot topics, while Dave Clark’s actuarial quartet visualizations prove truth is rarely limited to what the eyes see.

The truest disruptions fly furthest under our radars. Readers may be monitoring hantavirus or Ebola outbreaks a world away, but Zoë FS Rico’s and Yanisa Cheeppensuk’s solar storm coverage illustrates how significant risks to our interconnected world emanate from the sun. With uncertainty being the greatest certainty, actuaries’ best recourse is neither love nor hate, but rather, accept. In Mosley’s words, “Being comfortable with ambiguity doesn’t mean being unsure. It means being thoughtful. It means knowing what you know, acknowledging what you don’t, and still being willing to act.”