In 1971, the actuary Sydney Benjamin, who was employed by the actuarial consulting firm Bacon & Woodrow, presented a paper at a sessional meeting of the Institute of Actuaries. In his paper, Benjamin proposed a novel approach to examining the financial risk of guarantees in unit-linked insurance. He argued that price movements in financial markets were random. Rather than relying on actuarial judgement, Benjamin proposed to quantify financial risk by drawing a random sample of historical stock price movements and projecting them into the future. In so doing, Benjamin drew – knowingly or not – on a quantification technique prevalent in modern finance theory: the modelling of stock market returns as a random or stochastic process, as following a ‘random walk’.

As indicated by the quote opening this chapter, Benjamin's approach proved rather controversial. The future, most actuaries at the time agreed, could not be read from the past. It required expert knowledge of current stock market conditions and future economic developments, and it was folly to expect that the range of possible outcomes could be objectively captured by a random walk model. Against convention, Benjamin's paper was never published in the actuarial journals. Ronald Skerman, the President of the Institute of Actuaries at the time, decided to keep the meeting confidential. It marked the start of a long controversy within the actuarial profession about the nature of financial risk, the appropriateness of stochastic simulation techniques and the possibility of developing objective knowledge about the future of financial markets.

At core, the debate that followed the presentation of Benjamin's paper was a clash between two clusters of evaluation practices: one cluster revolving around the traditional actuarial practices of prudence and expert judgement to select an appropriate discount rate;