An actuary manages risk. They help organizations plan for the future and protect themselves from loss using analytic skills. The primary skill utilized is working with numbers to identify and analyze trends. By using numbers, the actuary evaluates the likelihood of future events. This is a key role in the fast-changing world with emerging risks and the need for more creative ways to assess them. Thus, it is a profession for the person who has a knack to tackle complex math equations.
Actuaries are needed anywhere risk is present:
- Insurance industry- calculate the respective company’s costs and determine the premiums for policyholders; predict how much the company can expect to pay in the event of a major natural catastrophe, such as a hurricane.
- Private and public corporations- require risk evaluation to conduct their strategic management decisions. An example, is the risk assessment of employees being injured on the job in an manufacturing facility.
- Consultants- whether it’s a nationwide actuarial firm or a one-person operation, the actuary assists companies in designing pension and benefit plans, evaluates assets and liabilities, and creates loss projections.
- Government- manage programs and oversee public companies to ensure compliance with regulatory laws.
Education and Accreditation
If the student has chosen to be an actuary while still in high school, then this is when the preparation should commence. By one’s senior year, the student should have a strong foundation of math classes, including statistics and calculus. Also, courses in computer science are necessary to develop the student’s skills in PowerPoint Excel, Access and Visual Basic for Applications (VBA).
Aspiring actuaries need to have a strong understanding of mathematics and business, and they should complete an undergraduate degree in a major such as mathematics, statistics, finance, economics or business. There are over 70 schools in the U.S. offering actuarial science degrees. However, many of these school do not offer a degree in actuarial science, per se. They do offer courses within their mathematics and computer science department that enable the student to pass the actuarial exam.
In the United States, the two largest professional organizations are the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS). CAS members are largely trained to work in the property and casualty insurance field. SOA members are trained to work all branches of actuarial science. Both organizations have a common set of preliminary exams. CAS has a single set of advanced exams.
There are 3 designations within the SOA:
- Associate of the Society of Actuaries (ASA)- demonstrated knowledge of the concepts and techniques for managing risk.
- Chartered Enterprise Risk Analyst (CERA)- demonstrated knowledge in the identification, measurement, and management of risk within risk-bearing enterprises.
- Fellow of the Society of Actuaries (FSA)- demonstrated knowledge of the business environments within which financial decisions concerning pensions, life insurance, health insurance, and investments are made.
To enter one of these societies, the actuary must pass an exam of which most are multiple choice. These designations are not a requirement to practice within the actuary arena; they do elevate one’s status in the profession. Many employers allow the actuary to study for these exams during the course of their employment. Some actuaries get the jump by taking these professional accreditation exams while in college.
Job growth as projected at 26% through 2022, by the Bureau of Labor and Statistics (BLS). This is higher than the average for other occupations. According to the BLS, the median annual salary was $94,000 in 2012.
Hence, this is a low stress profession working in an office while making a myriad of mathematical calculations in the assessment of risk. For those endowed with a mathematical mind, this is a lucrative vocation offering different areas of specialization.