Actuaries are responsible for calculating probabilities, finding ways to avoid undesirable outcomes, and planning ways to handle the occurrence of undesirable events. Actuaries determine and manage risk. They need business know-how, analytical skills, and a basic understanding of human behavior. Actuarial jobs are great for people who enjoy a challenge and have great problem solving skills. A desire to continue learning, improving, and earning credentials tend to be well-rewarded. Some of these rewards include cash bonuses, pay increases, and promotions. The amount you earn will be affected by your amount of experience, where you work (both geographically and in what industry), and the responsibilities you've been assigned.
Most of the people going into actuarial careers will end up in the insurance industry. This is because insurance companies have the most direct relationship to risk, how to avoid it, and how to minimize its impact. This is the insurance industry's bread and butter. Without actuaries, insurance companies would have no way to determine how much their premiums need to be to avoid loss, and when costs need to go up or down in relation to the changing physical and economic environment. For example, flood insurance must be more expensive for people living in flood plains! It is the actuary who helps the insurance company determine how much more those people have to pay.
Some examples of techniques actuaries employ in their work include offsetting risks with other related risks, focusing on the largest and most unlikely risks, and diversification. Offsetting risks with other risks has to do with anticipating risks that may have relation or cause and effect, and reducing the likelihood or impact of those risks. For example, if you have ascertained that when one of your company's stocks goes up, another related stock tends to go down in value, it will manage risk most effectively to invest in both. Focusing on the most financially devastating risks despite low risk is another important strategy. Controlling or eliminating the enormous financial loss involved in catastrophic events that are unlikely is extremely important to the security of any business. For example, though it is unlikely that your office will burn down, the cost incurred would be enormous. Fire insurance is absolutely essential for managing this risk, despite its low probability of occurring. And lastly and perhaps most importantly is diversification. Diversification is essential! The more small risks you have, the less catastrophic it is when any of these risks occur.
