“Actuaries are the daring people who put a price on risk, estimating the likelihood and costs of rare events so they can be insured.”
Stats modeling the world by bock, vellman and deveaux
First off, what exactly is risk?
Very simply – Risk is the possibility that something bad will happen.
Now here’s where actuaries come in…
By understanding risk, actuaries create products which protect people when things go wrong. This allows us all to live life and pursue our dreams without worrying about what might happen.
So how does an actuary know what will happen in the future?
Through looking at patterns from the past and applying fancy statistical techniques, actuaries can predict with high probability the likelihood and cost of future events.
Like detectives, actuaries are experts at investigating data. However, instead of solving crimes, we solve complex and diverse business problems.
Problems we solve:
The actuarial profession is one of the most unique in the business world. The problems we solve span multiple fields of study, including:
- Math and statistics
- Finance and economics
- Business and risk management
- Computer science
- And more!
Similar to doctors, actuaries specialize in a particular area of practice. In future blog posts, I’ll dive into more detail on the paths that exist for actuaries. But for now, it’s helpful to understand that the problems being solved tend to vary based on the “type” of actuary you become and where you work.
Examples include:
- At a start-up insurance company like Tesla, an actuary would use data about how someone drives to determine their price for auto insurance.
- At a company like Uber or Lyft, an actuary may leverage technology to expedite the claim handling process and detect potential fraud.
- A consulting actuary may be asked to help a hog farmer finance the potential loss of his herd due to disease or an apple grower fund lost wages for her employees when the crop is reduced due to freezing temperatures.
Regardless of the path chosen, actuaries are constantly thinking critically and creatively to solve a wide variety of problems.
Skills needed:
Because the job we do spans multiple disciplines, actuaries develop deep and well-rounded skill sets. In future posts, I’ll detail how to hone these skills in pursuing a career as an actuary. A few of the most important analytical, business and soft skills are below.
Analytical Skills
In addition to creativity and critical thinking, computer skills are a must! Actuaries are able to pull, manipulate and analyze data using a variety of programming languages and software.
Business Skills
Communication, organization and documentation are key! Actuaries need to articulate their thoughts and decisions clearly, both in person and in writing. We often translate very complex topics into simpler terms. Our business partners trust our judgment and expect that we will provide sound recommendations for action based on data.
Soft Skills
Adaptability, time management and teamwork are very important. Our profession is a mix of independent analysis and collaboration across the business. It is critical for actuaries to build strong relationships and partner effectively with others to accomplish goals.
And most importantly, actuaries need to be curious and passionate about learning! Because the profession is driven by outside forces such as economic conditions, legal decisions and technological advancements, new challenges arise daily.
Want to know more?
If you’re interested in learning more about this dynamic and rewarding career, stay tuned for my next post where I will share the benefits of the profession and why I personally love being an actuary.
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