Actuaries help businesses, organizations, and individuals to manage financial risk by evaluating existing data. Actuaries are very good at math and have a good understanding of economics and financial theory.
Unlike accountants who focus on past financial events, actuaries focus on future ones. Read on to learn more about this interesting, in-demand profession.
Actuaries use math, financial theory, and statistics to analyze the financial consequences of risk. Many actuaries work in the fields of insurance, pensions, or healthcare.
Because actuarial science deals with a lot of numbers and complex equations, actuaries today often use modeling systems and advanced computer software. This means they are familiar with computer science.
However, unlike statisticians or other technical mathematical professionals, actuaries provide their service in a business context, which requires them to be familiar with the business milieu in which they work.
If the role of an actuary still seems a bit vague or unclear, let’s look at the common job descriptions connected to the role of an actuary. Here are a few key responsibilities that actuaries generally have.
As you can see, actuaries don’t only crunch numbers behind a screen and then raise warning flags. They are called upon to provide creative solutions to the cost management of risk and to do it in a timely and informed way.
According to their area of expertise, actuaries fall into two broad categories—those who work in life and health insurance, including pensions and employee benefits; and those who manage financial risks related to liability insurance, automobile insurance, and compensation for workers.
Most actuaries work in the insurance industry, the actuarial consulting field, or in corporate management. The skillset and technical expertise that actuaries provide are particularly important for insurance companies, which need to effectively assess risk and its cost to stay profitable.
However, actuaries today are not limited to insurance companies and consulting firms. Governments, hospitals, banks, investment firms, and large corporations all need effective ways to manage financial risk.
Actuaries hold an undergraduate degree in actuarial science, economics, or commerce followed by associateship and fellowship certifications that require the completion of around 10 exams. Actuaries can start taking these exams before they obtain their undergraduate degree.
To become fully certified and attain the fellowship designation, actuaries will normally have to spend several years working in an internship and then in an entry-level actuary job after completing their undergraduate studies. Actuaries can benefit from studying computer science and programming languages since most of their work is done on a computer.
It would not be an exaggeration to say that actuaries are a modern version of financial fortune tellers. But instead of divination techniques and crystal balls, they use math and financial theory to analyze and distill large sets of data into an understanding of financial risks and possible solutions for avoiding the costs generated by those risks.