Actuaries in Data Science

 “Data science is very empowering for actuaries: it gives them a platform to move into wider fields.” 

John Taylor, Immediate Past President, The Institute and Faculty of Actuaries 


What is Data Science?

Data Science is no longer a buzzword in the industry, and is being implemented as a part of day to day operations of organizations across the board. It combines programming skills, mathematical and statistical knowledge, and domain expertise to gain valuable insights from data.

Data scientists apply machine learning algorithms to data in all forms- number, text, images, audio, video, and more, to design artificial intelligence (AI) systems which can perform tasks which would normally require human intelligence. These systems also generate insights into the data which are used by business analysts for making crucial decisions.


Actuarial Science and Data Science: What are the similarities and differences?

Data is a crucial tool for both actuaries and data scientists – the more data they get, the better results they can achieve. While data science focuses more on the programming aspect, actuarial science focuses more on the business and financial implications of data.

It is believed that actuaries are the original data scientists. Since the inception of the actuarial profession, actuaries have pioneered the use of statistics, Math, data and economics (and now automation and machine learning) to predict and manage future risk.



Career opportunities in data science for actuaries

There is a high demand in the industry for professionals with data science skill sets. Online recruiters indeed predict a 30% increase in demand for these professionals year-on-year. However, searches for jobs relating to data science grew at just 14% - suggesting a demand-supply gap.

These skill sets open new domains for actuaries other than insurance and boost their professional value. Actuaries can either work as full-time data scientists, or work closely with data scientists combining data insights with their knowledge of business, finance and risk management.


One of the industries where actuaries can add value with data science skill sets is healthcare. Like the BFSI sector, the healthcare industry is being disrupted by technologies driven by massive datasets being generated by diagnostic and treatment tech.

o   Wearable technology monitors and collects patients’ data 24x7 based on certain health indicators. Approximately 2 TB of such data is collected per-patient per-day.

o   Machine Learning and Deep Learning algorithms are used to read imaging data such as x-rays and scans and analyze them to detect common ailments and reduce rates of diagnostic failure.

o   Data science algorithms are also used to estimate the number of patients entering a hospital on a given day.

These applications fuel a need for professionals well-versed in data science skill sets. Actuaries are well-placed to work closely with data scientists by combining healthcare analytics with their strong understanding of finance and risk management. In the insurance domain, data generated by wearable technology can also be used to better understand consumers’ needs. This could facilitate actuaries to develop new insurance products which are more dynamic in responding to the individual’s health and lifestyle requirements.

The upcoming flood of data which will have to be analyzed provides unprecedented opportunities to actuaries to move into wider fields. Apart from healthcare and insurance, organizations across all industries will look forward to reaping the benefits of Data Science and Machine Learning.

The effective application of data science and AI requires efficient collection and analysis of data, problem solving, doing a cost-benefit analysis, and deciding whether a consequence is indeed genuine or merely random or accidental. Actuaries are specially trained for solving these specialized problems, and thus have a significant advantage in this field.

Data science is a fast-growing area of expertise which has applications in almost all fields. More and more businesses and industries are adopting and implementing it in their day-to-day business operations.

Actuaries, being data professionals, are well-placed to be involved in this field and make use of it to widen their professional horizons. This will also lead to increasing collaborations between actuaries and other professionals like data scientists and engineers.  


References -

https://www.datarobot.com/wiki/data-science

https://www.innoarchitech.com/blog/what-is-data-science-does-data-scientist-do

https://analyticsindiamag.com/can-an-actuary-become-a-data-scientist/

https://www.theactuary.com/opinion/2017/12/2017/12/05/are-actuaries-competitive-data-science

https://medium.com/infonation-monthly/actuary-2050-data-science-and-actuarial-science-as-one-77b89185bae9

https://www.actuaries.org.uk/learn-and-develop/lifelong-learning/data-science-actuarial-viewpoint/data-science-qa-ifoa-president-john-taylor

https://www.actuaries.org.uk/learn-and-develop/lifelong-learning/data-science-actuarial-viewpoint/what-are-career-opportunities-data-science-actuaries

Comments

Post a Comment

Popular posts from this blog

When An Actuary Helped Cricket Survive!!

Image
  When An Actuary Helped Cricket Survive!! Call for help, Comes an Actuary!! South Africa needed 22 off 13 balls to beat England in Sydney on March 22,1992 when rain stopped play. Ten minutes later the players were back on... and South Africa needed 21 off one ball. Blame the lowest-scoring-over rain rules, which ruined a cracking contest and chances of a WC Final. South Africa Team was out of the competition, but they left with a question hanging amongst every cricket fan…. What if this happens again??? That day Mr. Christopher Martin Jenkins said on the radio… "Surely someone somewhere could come up with something better” and soon Mr. Duckworth realized that it was a mathematical problem that required a mathematical solution." And then came the revolution!! ……. Since then, Mr. Duckworth – An Actuary , and Mr. Tony Lewis, a renowned Statistician worked together for years, just to bring out an effective method of calculating target score in 1997, officially
Read more

Operational Risk

Image
Operational risk can be defined as "the risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people, and systems, or from external events (including legal risk), differ from the expected losses.” In simpler words, it is a risk faced by a company due to failed internal processes such as those of a faulty system, unsuccessful procedures, employee errors, and legal hazards. Some other factors include technological glitches such as breaches of personal data resulting from cybersecurity attacks or risks tied with automation and artificial intelligence. These can also be caused due to physical catastrophes such as cyclones, earthquakes, or man-made events such as terrorism and vandalism. Operational risk includes all other risks except those of credit and market. These risks can be as minor as an affordable loss caused due to poor management of human error; for example, a poorly trained employee may lose a sales opportuni
Read more

Market Risk

Image
  RISK Our life is full of risks. Everyone in some way or other comes across a risk . We often hear  people around us saying “This investment is a risk” or “I took a risk by moving to a new country”. But what exactly is a risk? There are various ways to define it. However, the simplest explanation of risk is “the possibility of something bad happening.”  Risks come in all shapes and sizes. Financial risks are in the more prominent types of risks. People are hesitant in making investments with good returns as they are reluctant to bear the risk due to insufficient knowledge of risk management which makes it necessary to educate ourselves about these financial risks and learn to manage them for our financial independence. MARKET RISK One of the most crucial financial risks is “Market Risk”. As the name suggests, it is a risk that affects the entire financial market i.e. it affects entire industries as a whole. Basically, it is the risk of facing losses due to unfavorable changes in the m
Read more