Actuarial Science is the discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries. Actuarial science includes a number of interrelating subjects, including, Probability, Mathematics, Statistics, Finance, Economics and Computer Programming.
Actuaries apply financial and statistical theories to solve real business problems. These business problems typically involve analyzing future financial events, especially when amount of future payment, or the timing of when it is paid, is uncertain. A lot of actuaries work might be thought of as 'risk management', assessing how likely an event may be and the costs associated with it. Understanding how business operate, how legislation may impact and how financial economics can affect vales are all vital skills for an actuary. But what differentiates actuaries is their core mathematical, economic and statistical understanding and their ability to apply this to real financial problems.
The insurance industry can't function without actuaries, and that's where most of them work. They calculate the costs to assume risk-how much to charge policyholders for life or health insurance premiums or how much an insurance company can expect to pay in claims.
Actuaries provide a financial evaluation of risk for their companies to be used for strategic management decisions. Because their judgment is heavily relied upon, actuaries' career paths often lead to upper management and executive positions.
When other businesses that do not have actuaries on staff need certain financial advice, they hire actuarial consultants. A consultant can be self-employed in a one-person practice or work for a nationwide consulting firm. Consultant help companies design pension and benefit plans and evaluate assets and liabilities. By delving into the financial complexities of corporations, they help companies calculate the cost of a variety of business risks. Consulting actuaries rub elbows with chief financial officers, operating and human resource executives, and often chief executive officers.
Actuaries work for the government too, helping manage such programs as the Social Security system and Medicare. Since the government regulates the insurance industry and administers laws on pensions and financial liabilities, it also needs actuaries to determine whether companies are complying with the law. Who else asks an actuary to assess risks and solve thorny statistical and financial problem? You name it: Banks and Investment firms, large corporations, public accounting firms, insurance rating bureaus, labor unions, and fraternal organizations. To summarize, actuaries work for a variety of employers, including:
» Insurance companies
» Consulting firms
» Government insurance departments
» Colleges and universities
» Banks and investment firms
» Large corporations and public accounting firms
» Analyzing insurance rates, such as for cars, homes or life insurance.
» Estimating the money to be set-aside for claims that have not yet been paid.
» Participating in corporate planning, such as mergers and acquisitions.
» Calculating a fair price for a new insurance product.
» Forecasting the potential impact of catastrophes.
» Analyzing investment programs.
If you are interested in becoming an actuary, there are things you can do to prepare for the career while in college.
» Aim for a broad-based education that concentrates on business and mathematics.
» A degree in business, math, or actuarial science is helpful, but don't rule out a major in other subjects like economics, liberal arts, or finance. A double major is not necessary, but it might be a plus.
» Whatever your major, it is essential to have a strong mathematical background. Your curriculum should include math courses, such as calculus, probability, statistics, and any courses your school offers in actuarial science.
» Business courses, such as finance, accounting, management, economics, and computer science, will increase your career options.
» Courses in English, speech, and business writing will help you acquire the communications skills actuaries need.
» Because actuaries are involved in a growing variety of social and political issues, courses in the social sciences and humanities will help round out your capabilities.