What is an actuary and what does he do?
- An actuary is a professional who uses mathematics and statistics to analyze risks and probabilities to ensure that businesses remain profitable.
- An actuary creates risk categories that companies use to avoid unwanted outcomes.
- Actuaries design models to minimize damage when adverse events occur.
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Almost everything in life involves risk. When you get behind the wheel of a car, you risk being involved in an accident. When you invest in the stock market, you risk losing your investment. The older you get, the greater the risk of getting sick.
Here, we find people called actuaries, who quantify these risks so that insurance companies, financial institutions, and hospitals, to name a few, are able to provide risk protection to an individual. fair and competitive price.
What is an actuary?
An actuary is a business professional who measures and manages risks based on a thorough understanding of mathematics, statistics and business management. Essentially, actuaries predict a company’s financial future with math and science.
Actuaries are experts at using their analytical skills, business acumen, and knowledge of human behavior to assess financial risks within an organization in order to maximize profits and avoid catastrophes.
The future of actuaries is changing due to technological advancements including artificial intelligence (AI), machine learning and automation. These technologies will create new opportunities for actuaries as true business strategists.
Where do actuaries work?
Although actuaries often work for insurance companies, they are also employed by consulting firms, government entities, employee benefit departments, hospitals, banks, and even investment firms.
Any organization that needs to manage financial risk can employ an actuary. This could include ensuring that a pension fund’s assets match its liabilities, working for the Social Security Administration (SSA), or analyzing a set of investment options to determine which one is most likely. to be profitable.
What exactly do actuaries do?
Most actuaries, whatever their specialty, do the following for each project:
- Meet with clients or company representatives to discuss the current project
- Compile and analyze statistical data
- Estimate the likelihood and cost of an adverse event
- Design graphs, tables or reports to explain their calculations
- Discuss their findings with the competent authorities and propose solutions
By specialty, the role of an actuary may vary:
- Medicare actuaries develop health and long-term care insurance policies by predicting the costs of care based on a variety of factors including family history, location and occupation.
- Life insurance actuaries create annuity and life insurance policies based on risk factors such as age, gender and other health factors.
- Damage insurance actuaries formulate insurance policies that protect against accidents, natural disasters, fires and other events.
- Financial actuaries develop investment strategies that manage risk and maximize returns for companies or individuals.
- Pension and pension actuaries design retirement plans to ensure the availability of funds to pay future benefits and help companies develop alternative retirement plans such as 401 (k) s.
- Corporate Risk Actuaries identify economic, financial or geopolitical risks that could affect a company’s financial results or long-term goals.
- Public sector actuaries may work for the federal government and assess proposed changes to Social Security, Medicare or other government programs.
All of this, says Shane Canfield, CEO of a federal employee insurance provider, WAEPA, “Enables actuaries to help businesses grow and deliver value to their clients. Actuaries help leaders make strategic decisions and consumers prepare for their future.”
What is actuarial science?
The field in which actuaries work is known as actuarial science. It is a discipline that assesses financial risks in insurance, finance, and other fields using mathematical and statistical models.
Actuarial science deals with assessing risk and maintaining the economic stability of an organization or business. It involves the use of mathematics, statistics, and principles of probability to anticipate future adverse events and take preventative action.
How to become an actuary
The path to becoming an actuary begins with a college degree, says Canfield. “A strong undergraduate degree in mathematics is essential, usually as part of a university program specializing in actuarial science. Mathematics is the core and the main discipline, ”he adds,“ but it is also essential to have a solid knowledge of business management, risk management, finance, and forecasting. ”
Finally, depending on your specialty, there are accreditation exams to take. Accreditation is performed by one of two professional associations, the Society of Actuaries (SOA) or the Casualty Actuarial Society (CAS).
When it comes to compensation, actuaries outperform other similar professions, including mathematicians, statisticians, financial analysts and accountants. The median salary in 2020 was just over $ 111,000 per year according to the United States Bureau of Labor Statistics (BLS).
With job growth expected to be 18% between 2019 and 2029, which is much faster than most related occupations, long-term employment prospects in the actuarial field are strong for the foreseeable future.
The financial report
An actuary is a professional trained to model and predict a company’s financial future based on risk. With their analytical skills, business acumen and knowledge of human behavior, actuaries are able to predict unwanted outcomes and suggest solutions to avoid financial catastrophe.
For those with a keen interest in math, statistics, and analysis, a career as an actuary can be a great career choice. Rapidly changing technologies and new opportunities for actuaries as business strategists have resulted in above-average salaries and job growth in the actuarial field.