Actuary Essay

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Recommended: Introduction to actuarial science

Jessica Lauren Moon
February 26, 2014
Stats II
Paper #1

Actuary

Uncertainty is an aspect of life that cannot be ignored, and with that uncertainty comes a level of risk. Risk can result in a horribly undesired event or it could produce unimaginable success. Which will happen is a question that can be analyzed and answered to the best of their knowledge by actuaries. They “are the analytical backbone of our society's financial security programs… and the brains behind the financial safeguards in our personal lives” (Beanactuary), so that individuals can live without worrying too much about what the future may hold.

An actuary is a business professional who analyzes the financial consequences of risk. Actuaries use “mathematics, statistics, and financial theory to study uncertain future events, especially insurance and pension programs” (Purdue). Actuaries foster “formulas to predict how much money an insurance company will pay in claims, which results in determining the overall cost of insuring a specific group, business, or individual” (Ferguson 20). An increase in risk raises potential cost to a company, which, in turn, raises its rates. Actuaries analyze risk to estimate the number and amount of claims an insurance company will have to pay. They ultimately assess the cost of funding the business and incorporate the results into the design and evaluation of programs. A career as an Actuary is better described as a "business" career with a mathematical basis than as a "technical" mathematical career.

Within this profession there is a lot of depth within the title of an actuary. Actuaries typically do many different activities to come to the specific results. They spend a lot of time “compiling statistical data and other per...

... middle of paper ...

... lot of focus, hard work, consistency, and motivation to prepare for and successfully complete each exam that has to be taken. Typically each candidate wanting to be an actuary “studies for about 100 hours for every hour of the exam” (actuary.org). “Potential employers suggest the minimum requirements for hiring are a 3.2 GPA or higher and at least 1 actuarial exam” (Purdue). Desirable qualities that are sought after within an applicant are technical ability, communications skills, and a diverse background including courses in mathematics, statistics, business, and the liberal arts. The actuarial exams, consisting of 30-35 multiple-choice problems and lasting around 3 hours, administered by both the SOA and the CAS, cover a variety of subjects of importance in the insurance industry such as probability, interest theory, risk management, and life contingencies.

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