What is an Actuary?
An actuary is a business professional who deals with the measurement and management of risk and uncertainty.
The name of the corresponding profession is actuarial science. These risks can affect both sides of the balance sheet, and require asset management, liability management, and valuation skills.
Actuaries provide assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms. In summary, an actuary is uniquely skilled to advise on the economic impacts of risks and uncertainty.
How to become an actuary
To pursue the career, you don’t have to major in actuarial science–majors in math, statistics, finance, and economics also provide a solid foundation
After your degree program which will prepare you for the professional qualifying examinations, which on qualifying you become an actuary.
Where can I work?
Life insurance companies provide life insurance, pensions and other financial services.
Actuaries are involved at all stages in product development and in the pricing, risk assessment and marketing of the products. In addition, actuaries fill key roles in financial management and the investment of policyholders’ money by developing strategies that ensure customers get a good return.
It is currently a legal requirement that each Kenyan based life office appoints one or more actuaries to perform the ‘actuarial function’; advising the firm’s directors on the firm’s ability to pay claims and how to ensure that the life insurance and pensions benefits from the many millions of shillings invested by policyholders are secure.
General insurance is a fast-growing area for actuaries, both within insurance companies and consultancies. Many are employed by consultancies who provide services to insurers. General insurance actuaries are also to be found in reinsurance and brokerage.
General insurance includes:
- Personal insurance, such as home and motor insurance
- Insurance for large commercial risks.
As there are many different factors that can affect the size and number of claims, general insurance companies employ actuaries to assist with their financial management, about premium rating and reserving.
Depending on the specific projects, advice to clients can cover a wide range of topics, including:
- Setting up a new scheme
- Assessing the level of contribution to be paid by the members
- Valuing the fund if the company is to be taken over.
Additionally, consultancies will offer a range of services to their clients, such as enterprise risk management, merger and acquisition advice, corporate recovery and financing capital projects.
What would you do?
General tasks for graduates working in actuarial consultancy might include:
- Advising on the administration of pensions schemes
- Resolving business problems
- Keeping up to date with the business and financial worlds
- Undertaking actuarial valuations
- Determining the likelihood of different events and assess risks with mathematical models.
Some of the benefits of working in consultancy for graduate trainees are the greater variety of work, opportunity to travel and exposure to different industries and clients.
Actuaries have been involved in the field of investment management for decades. Indeed, it is probably true to say that more people see the word ‘actuaries’ through the daily stock exchange indices than through any other source.
Investment centers around the capital markets, (stock and bond markets, and currency, property and derivative markets). Many actuaries are involved in day-to-day activity in these markets (on behalf of their clients or employers), whilst others advise on the longer-term characteristics and implications of different investment strategies.
Actuaries are involved in buying and selling assets, investment analysis and portfolio management.
Actuarial techniques are ideal for use in measuring investment performance. Solving problems while making correct investment decisions is a constant stimulus. Many employers recognize the skills that the training provides and have allowed actuaries to develop these skills as well as others, such as the skills of financial economists. Actuaries are seeking to improve their tools both in the development of valuation models and in the refinement of traditional methods.
Actuaries are becoming increasingly involved in banking. For example, some of the leading insurance companies now have their own established banking operations, with actuaries filling some of the senior executive positions for finance and risk.
The leading retail banks are also increasingly employing actuaries, as they recognize that the longer-term approaches advocated by actuaries can add value to their businesses. As insurance companies increasingly hedge their risks, we have seen a corresponding increase in the demand for actuaries from the investment banks that provide the hedge products.
As the insurance and banking markets continue to converge, we can expect to see the demand for actuaries within banking fields continue to grow.