What is an Actuary?
An actuary is a professional person concerned with the financial evaluation of risk. The actuary's job is to design and administer insurance programmes, pensions, government welfare plans and other similar financial programmes.
An actuary is mainly concerned that these programmes operate on a sound financial basis and to do this they use various areas of mathematics (e.g. probability theory, statistics, theory of interest), as well as other general principles of economics and finance.
Definition of an Actuary
An actuary can be defined as; "a specialist in the mathematics of risk, especially as it relates to insurance calculations such as premiums, reserves, dividends and insurance annuity rates". Most work for insurance companies to evaluate applications based on risk.
About the Actuary Profession
The profession is over 150 years old and dates back to the emergence of scientific principles in the pricing of life insurance contracts and the management of life insurance companies. The pricing of insurance benefits is based on the survivorship rate and therefore it is a core actuarial discipline.
The profession however has widened its field over the years and now it includes such diverse areas as pension consultancy, investment management and non-life insurance, etc. Actuaries are also used in courts for quantifying damages, as an expert witness in the event of death or injury to the parties involved.
Actuaries are personally responsible for the advice they give and therefore those companies or people who use actuarial services need to be able to depend entirely upon the skill and integrity of the actuary.
Why Would I Want to be an Actuary?
Most actuaries describe their work as challenging and interesting and generally enjoy a good working environment. The profession is open to women and members of under-represented minority groups.
The demand for a career in the actuary profession is predicted to be steady and slightly increasing, although the exact nature of future healthcare reforms will have an effect on the need for their services.
How Can I Become an Actuary?
To become an actuary you need to become an associate and ultimately a Fellow of one of the professional societies that run examinations in this area. Entry into the profession is obviously competitive and success in the field demands a lot of commitment and hard work during the years of study and of course requires integrity and hard work after graduation.
Generally the qualities most sought after in applicants are high technical ability, excellent communication skills and a broad background in mathematics, statistic, business and the liberal arts.
Experts in their Field
Actuaries are experts in:
- Evaluating the likelihood of future events.
- Designing ways to reduce the likelihood of undesirable future events.
- Reducing the impact of undesirable events that do occur.
The impact of these undesirable events can be both emotional and financial, so reducing the likelihood helps to relieve any emotional and other pain involved. Some events such as death, however, cannot be totally avoided, so reducing the financial impact is quite important.
Actuaries are the leading profession in finding ways to manage risk, because that is what they do best. It does take a combination of strong analytical skills, business knowledge and understanding of human behaviour to design and manage programmes that assess and control risk.
Skills Needed by Actuaries
You will require skills of a gambler and those of a marathon runner if you want to become a good actuary. A gambler's understanding of statistics, probability and risk analysis is most valued. Most actuaries graduate college with a degree in maths, or a business-related field, although the industry is now looking at students who can demonstrate mathematical aptitude.
The requirements of stamina, as in a marathon runner, is not so much for the long hours required in the field of actuary, but more in the length of time it takes to complete examinations in this field.
They are Key Players in the Business
Actuaries are key players in the management team of the various companies that employ them. Actuaries are the analytical backbone of any company and are popular today because of the fast changing business world with its risks and new ways of being creative in tackling those risks. Most actuaries work in a good environment alongside other professionals, and enjoy the respect of their peers. Their work is highly respected and they are key players in the business arena today.