An actuary is an expert whose job is to solve actual problems in a business, especially those related to risks. It might sound boring to the average joe, but gamblers and math whizzes would surely be twitching with delight. The main task for actuaries is “forecasting” future risks. The future is abstract and vague, this means that actuaries dwell on the uncertain and, with the help of mathematics, can help foresee risks that might occur. Although the word math usually means working at a solitary confinement, many actuaries also work as consultants, travelling places to help different companies.
By using mathematical and statistical methods, Actuarial science is a discipline that assesses financial risks in the insurance and finance fields (Investopedia.com, 2021). Typically used in the insurance industry, actuarial science deals with evaluating risks and maintaining the economic stability of insurance or financial organizations. By applying the mathematics of probability and statistics, actuarial science aims to define, analyze, and solve financial implications of uncertain future events. By analyzing past data, actuaries use the information to determine how much money should be set aside to cover the financial losses which could occur in the future. One of the primary challenges for an actuary is when there is no past data to work with, or the data is not relevant anymore due to certain changes. Actuaries generally work on teams that often include managers and professionals in other fields, such as accounting and finance.
An actuary is not to be confused with a financial planner and risk manager. Risk managers or risk analysts are responsible for identifying, assessing, and controlling threats to an organization’s capital and earnings. These risks might stem from a variety of sources: financial uncertainty, natural disasters, legal liabilities, etc. Financial planners mostly deal with individuals in a similar manner to wealth management professionals. Providing counsel and advices on various financial related issues, from tax and estate planning, to risk management and insurance planning (allaboutcareers.com, 2017). Actuaries are responsible in handling risks in finance. They are basically tasked to constantly predict future events and their financial implications. Actuaries are expected to estimate the economic cost of an event such as death, sickness, an accident, or a natural disaster.
Primarily, actuaries work for insurance companies. Although most work full time in an office, some actuaries work as consultants for other companies or clients. Actuary candidates need a bachelor’s degree and are required to pass a series of exams to become certified professionals. Generally speaking, it takes three to five years to complete the educational requirements to get an entry-level job. A strong background in mathematics, statistics, and business is a must. Actuaries are usually found working for health, life, and property and casualty insurance companies. According to collegegrad.com, the largest employer of actuaries is finance and insurance (71%), followed by professional, scientific, and technical services (13%). The median annual wage for actuaries was $111,030 in May 2020 (bls.gov, 2021). Employment of actuaries is projected to grow 18 percent from 2019 to 2029, much faster than the average growth for all other occupations.
In short, actuaries deal with the uncertain. Actuarial science is a discipline that assesses financial risks in the insurance and finance fields by applying mathematical and statistical methods. Not to be confused with other analytical fields, actuaries only deal with quantifying risks and its financial implications that could occur in the future. They analyze past data then use the information gained to determine how much money should be set aside to cover financial losses which could occur in the future. Actuaries usually work for insurance companies, and most work full time in an office, although some actuaries work as consultants for other companies or clients. In order to be a certified professional, aspiring actuaries must have a bachelor’s degree and need to pass a series of exams, which usually takes about three to five years of training. Gamblers and math whizzes would surely be delighted indeed.
Sources:
· Kagan, J. (2021, May 19). Actuarial Science. Retrieved from https://www.investopedia.com/terms/a/actuarial-science.asp
· Careers, A. A. (2021, August 25). The role of financial planning, actuarial and risk management. Retrieved from https://www.allaboutcareers.com/career-path/financial-planning-actuarial-risk-management/
· Collegegrad.com (2014, September 29). actuaries. Retrieved from https://collegegrad.com/careers/actuaries
· Balan, R. S. (2021, August 25). What Is Actuarial Science and Should I Study an Actuarial Degree in 2021? Retrieved from https://www.mastersportal.com/articles/2732/what-is-actuarial-science-and-should-i-study-an-actuarial-degree-in-2021.html
· Bls.gov. (2021, April 09). Actuaries: Occupational Outlook Handbook. Retrieved from https://www.bls.gov/ooh/math/actuaries.htm
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