Being An Actuary

1. What is an Actuary?

Simply put, actuaries manage risk.

The future is uncertain and full of risk. Risk is the chance that an undesirable event will occur, but risk is also opportunity for a lot of people and that`s where actuaries come in.

Actuaries are experts in:

• Calculating the likelihood of future events using numbers.
  
• Designing creative ways to reduce the likelihood of undesirable events.
  
• Decreasing the impact of undesirable events that do occur.

Actuaries are the leading professionals in finding ways to manage risk. It takes strong analytical skills, business knowledge, and understanding of human behaviour to manage complex risks facing our society. In a fast-changing world, with emerging risks and the need for more creative ways to tackle them, there are constant opportunities for growth in this industry.

Actuaries are the analytical backbone of our society`s financial security programs and the brains behind the financial safeguards in our personal lives, so we can go about our day without worrying too much about what the future may hold for us.

2. What is Risk?

Explaining what Actuaries do would not be complete without explaining risk.

Risk comes in many forms. Everyone and every organization faces risk. As experts in measuring and managing risk, actuaries fill a significant need in our society. Their contribution to society`s psychological, physical and economic well-being is incredible. If their risk management programs didn`t exist, our economy would not be able to prosper.

3. A Few Problems that Actuaries Solve

• Actuaries determine how much an insurance company should charge for car insurance, taking into account many factors such as the car that is being insured and details about the driver.
  
• They develop life insurance products so that parents can enjoy adventurous recreational activities such as rock climbing while feeling secure that their children will be cared for in the event of an accident.
  
• They determine how much an insurance company should charge for homeowners insurance, considering a number of factors such as where the home is located.
  
• They determine how much an insurance company should charge businesses for the many different types of insurance that businesses need, such as liability insurance and business interruption insurance.
  
• They determine how much money insurance companies must hold to be able to pay off all claims from their customers, who purchased insurance products from them.
• They help companies establish their retirement plans.
  
• They assist banks in managing their assets and liabilities and develop ways to manage financial risk.
  

Risk is at the heart of the problems they solve.

4. Areas of Expertise

Actuaries manage risk and models the financial impact based on the likelihood of future scenarios. They have a deep understanding of the nature of risk and excel at putting a value on a risk, regardless of the industry.

While risk exists in all industries, no other industry handles the financial impact of risk more than the insurance industry. Actuaries have traditionally specialized in life, health, property, and casualty insurance.

For the insurance industry, they develop, price, and manage insurance products. They also are involved in defining and creating pension and retirement plans for organizations. And as the population ages, they are finding roles as financial planning advisors.

But their skills and talents are transferable to any industry that requires risk modeling and management, including:

• Financial services, such as banking and investment management.
  
• Transportation, such as shipping and air travel.
  
• Energy, such as utilities, oil, and gas.
  
• Environment, on issues such as climate change.
  
• Actuaries also work with government institutions such as the NHS to manage social programs and to develop regulations and legislation.
  

5. Who Employs Actuaries?

These are mainly insurance companies and consultancies. Top employers in the insurance industry includes AXA, prudential, AIG, Friends Life, Zurich, Aviva, etc. Top employers in consultancies are the Big Four (PwC, Deloitte, EY, KPMG), Aon, Towers Watson, etc. The Government Civil Service Fast Stream also offers actuarial schemes.

Starting salaries for graduates (these graduates tend to have a degree in either Maths, Statistics, and sometimes Economics/Accounting and Finance) are on average £30000 and can rise to £50000 after qualifying from passing the 15 compulsory exams (which takes around 3-4 years). Actuaries then tend to move to being a manager, director, or even a partner in the company they work for where they can earn six figure salaries.

6. The Day to Day Work

No two days are the same. One day you could be running through computer programs and making sure risk models are correct and running smoothly. Another day you could be talking to the chief risk officer of a large investment bank or insurance company explaining complex concepts of risks that they are facing in simple terms and discussing strategies to hedge these risks. The work-life balance is also rated as one of the best in the world: whilst you will be working hard during the day, afterwards there will be plenty of social events organised by these companies.