The Actuarial Society

                                                                             We have all had days when we wished we could just accurately predict the weather, may it be for our dinner dates or even a long vacation. But alas, nature isn't that predictable. It is complex to predict how the weather will behave in the coming hours, days, weeks and months. The only one thing we can do to get the best and closest results is to calculate the probabilities of the prevalence of particular weather conditions. But the question is how? Lets understand the process- We begin with gathering the observations from all around the world and then use these observations to set up a computer simulation of the atmosphere which represents what is happening in the world right now. The ...

The Paradox goes around the well-known fairy-tale princess participating in an experiment. The experiment commences on a Sunday. The princess is told that she will be put to sleep and the experiment will proceed on the toss of a fair coin. If the coin comes up heads, she will be awakened on Monday, interviewed and put back to sleep. However, the princess will have no recollection of the interview or being woken up. If the coin turns up tails, the princess will be woken up on Monday and Tuesday, will be interviewed and be put back to sleep with zero recollection. In either case, the experiment ends on waking up the princess on Wednesday without the interview aspect.  Whenever Sleeping Beauty is awakened and interviewed, she will not be aware of the day or whether she has been awakened before. During each awakening, she is questioned- “What is your degree of certainty* that the coin landed heads?”  Upon basic analysis we figured out that since the Princess will have absolutely z...

~ Sabyasachi Rathore The world of the stock market is full of ups and downs. These ups and downs are coined as a boom and slump in the market by professionals. The overall degree of profit or loss that investors make is directly connected to whether the market is bullish or bearish. Despite the unpredictable nature of the market, it is possible to make an assumption whether the share prices will rise or fall. One of the ways to predict is insider trading which is illegal in India. Ruling this out, we have a legitimate way of achieving this via statistics. The simplest way an investor can use statistics to make profit is by checking the history of the shares he/she wants to invest in. For instance, if the price of a share has been decreasing for a while and the company is planning to launch a new product then buying shares of that company will prove to be profitable.  There are different approaches on how your profits can be guaranteed. A common strategy used by players in the marke...

~ Kshitij Srivastava “ You can’t improve what you can’t measure” -Peter Drucker  In the fast-flying world of aviation, airlines have to be at the top of their game to remain competitive, and statistics are a useful tool in this pursuit. Airlines use statistics to provide them with vital information regarding viability of routes, future profitability, and to make flight plans. Moreover, statistics are also used in meteorology for weather forecasting, which is crucial for air traffic movement. The Sky in Numbers At any point of time, 8,000 to 20,000 planes are flying in the skies connecting a total of 41,820 airports in the world in a $400 billion industry. The meticulous and complicated planning required to keep this industry up and running is fueled by business insights derived by carefully analyzing all sorts of data. Thus, the fields of statistics, data science and big data have valuable contributions to aviation. Airlines have access to huge amounts of data on a regular basis....

From medical sciences to space sciences, weather forecasting to banking, computing the chances of winning the lottery to predicting the stock price movements and from psychology to actuarial science, probability and statistics is everywhere!  By definition, statistics is a form of mathematical analysis that uses quantified models, representations and synopses for a given set of experimental data or real-life studies. In simple terms, statistics is that branch of applied mathematics that deals with data collection, organization, analysis, interpretation and presentation. In this article we will understand the importance of statistics and probability and their applications in various domains, conventional and otherwise.  Why is understanding probability important? Probability, in the most crude terms, is a number that reflects the chance or likelihood that a particular event will occur. We use probability in daily life to make decisions when we are not sure what the outcome will...

Gambling is a zero-sum game and is miles apart from insurance or any other related products that Actuaries typically design. However, that is no reason for us to think that actuaries have no role in this domain. Risk analysis and modeling is a skill that  every actuary possesses and that’s a fact. And unlike any investment product, gambling too is filled with risk.   Dominic Cortis, an associate actuary explained how he carries out modeling for betting. He explained how he builds a model using a set of assumptions which is later developed into a more sophisticated version of itself by working on its intricacies. Dominic also threw light on the fact that the modelling process and the experts involved in gambling are not very different from those in the finance domain. Dominic also considers insurance and gambling to be exactly the same and the only dissimilarity he sees between the two is “insurable Interest” i.e, a person paying for insurance has something to lose but the case...

  “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...