An actuary is more than just a number cruncher. They not only have to be good at maths but an innovative thinker and problem solver in order to help companies manage their risk.
Actuaries analyse past and present data to solve real business problems. A lot of actuaries’ work is about risk management: assessing how likely an event may be and the costs associated with it. To make things more challenging, actuaries really need to understand how businesses operate, they need to keep up to date with legislative changes, long-term demographic trends and have general commercial and economic awareness.
An actuary’s early training has a split focus on passing the professional exams and building practical experience. Once qualified many actuaries go on to be practising specialists in one of the traditional fields, with many actuaries becoming senior managers in firms of consultants or insurance companies.
There are many different career paths: some actuaries specialise in technical research, whilst others may focus more on commercial activities. The different roles require different mixes of skills, but whatever a particular actuary’s strengths, there will be a niche for them.
Passing the professional exams is the first hurdle to becoming an actuary, and this must be coupled with at least three years’ practical experience to fully qualify. It takes a lot of hard work, so ensure you work towards your actuarial qualifications with a firm that really supports you, meets the costs associated with your exams and study, provides you with study leave and also gives you the practical experience you need to make your mark.
Beyond this you will need to develop the capacity to give expert advice. Often this will involve dealing with non-actuaries and the general public, so the ability to communicate and articulate difficult topics to non-specialists is of paramount importance.
“Being an expert in such a complex area brings great rewards. Actuaries’ pay and conditions compare well with other leading professions.”
Being an expert in such a complex area brings great rewards. Actuaries’ pay and conditions compare well with other leading professions.
The rewards of being an actuary are far more than financial. It is a stimulating job that challenges you to think at all times and offers you the opportunity to make a positive impact on the organisations and their employees.
The traditional areas in which actuaries operate are: consultancy, investment, life and general insurance
and pensions. Actuaries are also increasingly moving into other areas of the financial sector such as risk management, banking and capital project management, where their analytical skills can be employed.
Actuarial consultancies offer a whole range of services to their clients on issues such as acquisitions, mergers, corporate recovery and financing capital projects. Many also offer advice to employers and trustees who run occupational pension schemes. In fact, such consultancies are probably the biggest employers of actuaries in the UK.
A successful consultant will work to develop a real partnership with their client, allowing them to gain an in-depth understanding of commercial operations and business objectives. Actuarial consultants also need to be able to communicate effectively, often explaining complex technical issues and ideas to all kinds of people, whether they are finance directors, CEOs, shareholders or trustees.
In the area of investment, actuaries are involved in a range of work such as: pricing financial derivatives, working in fund management, or working in quantitative investment research. Often investment actuaries work in fields where their understanding of insurance or pension liabilities helps them to manage the investment of the corresponding assets.
The work carried out by actuaries in insurance includes designing new insurance policies, setting premium rates, calculating a company’s financial status (based on the policies already sold) and answering technical queries from policyholders. Insurance actuaries also undertake detailed investigations of different experiences such as how assets and expenses have performed and the extent of different types of claims for different types of insurance policies (e.g. death claims for life insurance or car theft for motor insurance).
The work of actuaries is vital to the health of pension schemes. Actuaries are heavily involved in designing and advising occupational pension schemes. This could be a formal valuation for one person’s benefits or for a whole scheme with one million members.
As actuaries gain experience, they spend less of their time working on the strictly technical aspects, instead applying their expertise to wider business challenges. These may include advice on financial strategy advising a client on remuneration policy, consultancy around a corporate takeover and other large scale projects. This demands proactive and creative thinking, as well as technical prowess and great interpersonal skills.
If you have found this overview interesting then read the rest of this guide, where you will find more information on all the areas that have been touched on here.