“You have brain in your head. You have feet in your shoes. You can steer yourself in any direction you choose.”
This quote by Dr. Seuss is a perfect representation of how diverse actuarial science is as a course and how the perception of the professional contribution of an actuary not only depends on the view in the eye of the beholder but also the wide variety of roles that actuary fill in any kind of organization.
PROBABILITY, FINANCIAL CONSEQUENCE, AND PRESENT VALUE – The work of an actuary revolves around these three concepts. They focus on making financial sense of the future. Actuaries can predict future events by using past data/historical data and experiences and make assumptions about how the future might be different from the past. They are able to forecast the financial future by analyzing past events, assessing the present risk and modeling what can happen in the future.
An actuary can study the market, the risk it exposes their clients/firms to and try to strategize accordingly. They play an important role in the individual world as they help individuals manage risks (What is a risk- an actuarial definition) and also the institutional world by helping companies with risk based decisions. Mostly, actuaries are seen designing insurance product to insure individuals against the risk they might face and also to keep their family’s financial security intact. They can build financial instrument for pension contribution so that people can retire peacefully and thereby helping people manage their livelihood. They are responsible for designing and pricing insurance policies and pensions that are financially sound.
An actuary helps companies decide on risk they should avoid, manage, put some guardrails around or transfer to somebody else altogether. They understand risk and can safeguard businesses from unforeseen movements in the market. They know where to invest and how asset returns are correlated and so this allows people to save up for the future. They comprehend mortality and can predict various population movements. An actuary can price policies using risk factors and can use their mathematical and statistical skills to predict the need for reserves and liquidity to meet future obligations and ensure that insurers are protected against the various risks that they are exposed to.
Data is the essence of the job of an actuary, as they gather, assemble and analyze information to estimate the probability and likely cost of an event. They address financial matters, such as how a company should invest their resources to maximize return on investments. They also use different modeling techniques to forecast likelihood of a certain event occurring and the impacts these events will have. They help manage credits and devise new investment tools. They use pricing models to perform analysis. They monitor market for current prices and products and prepare competitive analysis reports.
It integrates a lot of different disciplines and enables one to use their mathematical and technical skills to make real time business decisions in interesting regulatory environment. Actuaries use their statistics and probability knowledge in order to look at financial risks of different companies and individual as a whole. To an accountant, actuary is the one who helps estimate and understand discounting assets and liabilities. They can be premium and liability adequacy advisor for a board member, they can also advise administration officer on how to administer efficiently. For a risk manager, actuary is the one who helps them in identifying hidden risks and estimating embedded options.
So, actuaries are present nearly in every field , often without being identified or recognized as such. For further studies, latest updates or interview tips on actuarial science and machine learning, subscribe to our emails.