Demystifying the Actuarial Profession?

Actuarial Science is a profession that’s shrouded in a lot of mystery.

Even though actuaries have been around for hundreds of years now, all but a few people know what an actuary actually is and what the job entails. To put it simply, actuaries are professionals that gauge future risk using extensive mathematical and statistical methods.

For example, you and your friend are betting on your favorite IPL team with ₹20,000 as your initial bet; your friend tells you that he’ll pay you ₹1,00,000 if your team wins this season but in return gets to keep the initial amount of ₹20,000 if your team ends up losing. Is this bet worth it? What is the probability of your team winning the league? Is ₹20,000 a fair amount for the returns you might get? If not, what is a price for you to pay in order to minimize the losses you’ll incur in case your team doesn’t win. These are the kind of questions that an actuary answers on a daily basis.

Human beings have been reasonably successful in developing means by which risk can be controlled. Lowering the probability of occurrence of an adverse event, or lowering the damage caused by the aforementioned event, is the first order of defense against any loss. It is an actuary’s job to gauge how these defenses should be set up to mitigate any potential loss to the greatest extent possible. Actuaries are leading professionals in finding ways to manage risk using a combination of strong analytical skills, business knowledge, and an understanding of human behavior. They identify and analyze potential future risk and associate a numerical figure to it , in other words, they quantify the risk. Being an actuary demands a keen interest in mathematics, statistics, data analysis, great interpersonal skills and a very strong moral compass that follows the most ethical practices.

Actuarial science has widespread applications, an actuary can work in any field that has an element of risk associated with it. Actuaries are currently majorly employed in the insurance industry, where it is necessary for potential loss to be mitigated to the greatest possible extent. Don’t mistake an actuary for an insurance agent who sells you the policy, an actuary is the person who designs and develops the policy in the first place. Actuaries are also often mistaken to be underwriters, the people responsible for determining whether or not you are the right customer for the company, the actuary ensures that the company stays solvent and exists by pricing policies and determining reserves accordingly.

With ever growing uncertainty in our world and the ever-expanding applications of the subject, the need for actuaries has never been more profound. The profession has one of the highest median salaries, virtually a 0% unemployment rate and it’s expected to grow by 20% in the next 10 years. So, is pursuing a career in actuarial science right for you? It definitely is one of the most lucrative professions, if you have a keen interest in mathematics and statistics and you want to apply what you learn in order to steer the world towards the greater good.


References: 

https://www.academia.edu/15925578/Fundamental_Concepts_of_Actuarial_Science

https://www.truity.com/career-profile/actuary

https://etchedactuarial.com/what-do-actuaries-do/

https://www.usnews.com/education/best-colleges/articles/reasons-to-study-actuarial-science-and-how-to-become-an-actuary


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