Actuaries—Making Risk a Manageable Proposition
Ever wondered what the chances are you’ll be hit by lightning? Or whether it’s more likely that a comet will strike you from outer space? While it sounds far fetched, this kind of calculation is just the sort of thing an actuary does for a living. Using statistical models, computer information and lots of research, actuaries assess the likelihood of risk and danger in daily life. They then use this data to determine whether a risk needs to be insured against, and if so, what that insurance should cost. Actuarial skills are also used to assess accident risk and work out models for the best and most cost effective ways to control that risk. They know what the chances are that lightning will strike you; and they can also advise your local golf course on whether they’ll need lightning insurance to cover its patrons in the event of a big storm.
Actuaries use statistics and financial models to determine retirement programs. Need to know how much you’ll need to save to retire? An actuary can use compiled information about life expectancy, earning power and many other factors to help you determine just how much you’ll need to put away for that rainy day. To do all this, Actuaries need to know a lot about statistics—it’s their stock in trade. They use computers and complex programs to model the world and all the interrelationships within it. Sometimes they even design those programs and the statistical models that control them.
Types of Actuaries
There are many different types of actuary. While most work in the insurance industry, developing life insurance policies and calculating policy risks, others work in the healthcare industry or in government.
Government actuaries are responsible for managing important social programs such as Social Security and Medicare, making sure that these programs remain strong and solvent over many decades. They also assess the costs of these programs to make sure they comply with mandates established by federal and state laws.
Actuaries working in the financial service sector assess the risks of investments and markets, as well as managing credit and setting the offering prices of corporate securities. In addition, financial service actuaries design investment tools and ''products'' as part of their company’s overall sales strategy.
Actuaries are also often called upon as expert witnesses in legal situations where risk assessment is a factor. This brings them in contact with corporate executives, government officials and legal professionals. This means that communication can be as much a part of an actuarial job as developing financial models or designing insurance policies.
Actuaries not only use computer software; they also help develop it. With a strong background in computer science and math, the actuarial position often overlaps with the role of the computer engineers who write actuarial programs.
Pension actuaries evaluate pension plans, making sure they are sound and compliant with the provisions of the Employee Retirement Income Security Act (ERISA) of 1974. They are also responsible for keeping the plan’s participants and government regulators up to date on how a particular pension plan is doing.
What’s the Job Like?
With high pay, great job stability and a low stress environment, it’s not surprising that being an actuary is considered to be one of the most desirable jobs in the U.S. While there are many types of actuarial position, all of them are based in an office environment. Computers are a big part of the actuarial job; they’re used to run projections, gather data, and create reports. Hours are nine to five, with weekends free. Since many actuaries eventually open their own consulting firms, the option of being your own boss and setting your own hours and salary are an extra perk.
Employment Outlook
Based on the US Department of Labor’s 2006 survey, there were about 18,000 actuaries, working in a variety of positions. Roughly 50% worked in the insurance industry assessing risk for large carriers. The remainder worked in financial management, managing risk for pension funds, working with small insurance agents and brokers, or operating with multi-service providers in management, consulting or public relations. A still smaller group also provided training and actuarial skills to the computer industry, designing actuarial programs and consulting on actuarial/financial software development.
As the population ages and healthcare issues come to the forefront, the need for actuaries is expected to increase faster than the national average for all jobs through the coming 2006-2016 decade. Expanding financial markets, especially in light of current investment instabilities and rapid rates of change powered by internet commerce should also drive a greater need for actuarial services.
Actuarial positions are often listed in newspapers or on the internet, but most positions are found through professional business publications or through word of mouth. Companies also headhunt for new talent at the over 100 colleges and technical schools around the U.S. that offer actuarial training and degrees.
Qualifications
Becoming an actuary requires a great deal of specialized training. The profession requires a strong math and statistical background, with a degree in math, statistics, economics, finance or accounting as a prerequisite. These skills are gathered together as part of overall actuarial science degrees offered at the college or technical school level by one of 100 colleges or universities nationwide. While an actuarial science degree isn’t an absolute requirement (some companies hire applicants with degrees in related fields such as computer engineering or business management) job seekers will still need to be able to pass the difficult examinations required to become an actuary. Held twice a year, passing these exams is a major requirement for any actuarial position.
Conclusion
Actuaries have one of the most desirable jobs in the current job market, with excellent salaries, good working conditions and the option of parlaying long experience into a lucrative private consulting practice. If you’re good at numbers—and even better at explaining those numbers to others, you might want to consider becoming an actuary.
