Actuary - Explained
What is an Actuary?
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Back To: INSURANCE & RISK MANAGEMENT
What is an Actuary?
An actuary is a person conversant in the profession of mitigating and managing the risks associated with financial investments and other ventures that are potentially risky. Actuaries have excellent knowledge and skills in mathematics, statistics and business management. The aid managers in making strategic decisions that help in the growth of a business and in providing value to customers. One of the most critical jobs in an organization is risk management because it allows managers to act on the available information to minimize the impacts of problems that may occur. It is also used to assess the risk of a possible investment opportunity to determine if it might yield negative results for the company. The figure of the actuary has been growing over the years since it is the one that is responsible for determining the success probabilities of the decisions made in the organization.
What Does an Actuary Do?
Actuaries are people who have studied in the profession of Actuarial Science and Statistics and thus can analyze the financial risks faced by an organization when making decisions. They evaluate the level of risks existing in a company by using mathematical formulas and probabilities to facilitate effective decision making. Actuaries form an essential part in the insurance industry because they are used to study the actual probabilities of events occurring. They help insurance policies to be valued using calculations of the financial costs derived from all the possibilities that are available. Their work, however, extends to other areas and industries. In business and finance, this profession is essential since it allows managers to know the level of risk and the probability of an event occurring. It also helps to quantify the effects of the different possibilities that might be.
What are the functions of actuaries?
Actuaries apply mathematics and statistics to perform a risk analysis. However, since they work in a large number of industries, they are involved in performing different tasks. These include:
- In insurance companies: They assess the possibility of an event occurring and then quantify the financial costs of these possibilities. This information is used in the calculation of insurance policies.
- In Social Security: In this field, they assess the feasibility of public health systems, pensions among others. They also analyze the economic consequences of the situations that may generate a risk for the system.
- In business: They measure the probability of occurrence of the different risks faced by a company and the impacts they may have if they occur. They offer information to be used in making the correct decisions that mitigate the effects of these risks.
- In finance: They evaluate the level of risk in different investment ventures to determine their feasibility and also their profitability since high-risk investments also attract high-profit margins.
They then establish tools that enable investors to minimize the risks and obtain the maximum benefits. Although the actuary profession is relatively new and not well known, they attract some of the highest salaries due to the essential nature of their work.
- What is insurance?
- Captive Agent
- Independent Agent
- Captive Insurance Company
- Combined Ratio
- Claims Adjuster
- Capital at Risk
- Assigned Risk
- Incurred But Not Reported
- Qualified Actuary
- Cession (Re-Insurance)
- Burning Cost Ratio
- What is an insurance contract?
- Accidental Means
- Anti-stacking Provisions
- What is an insurable interest?
- What are the common categorizations of insurance?
- National Association of Insurance Commissioners
- Insurance Regulatory Information System
- American Academy of Actuaries Definition
- American Association of Insurance Services Definition
- American Council of Life Insurance Definition
- American Insurance Association Definition
- American Risk and Insurance Association Definition
- LLoyd's of London
- Associate in Insurance Services (AIS) Definition
- Associate in Loss Control Management Definition
- Associate in Marine Insurance Management Definition
- Associate in Personal Insurance Definition
- Associate in Reinsurance (ARe) Definition
- Associate in Risk Management Definition
- Associate in Commercial Underwriting Definition
- Associate in Insurance Accounting and Finance Definition
- Associate in Surplus Lines Insurance Definition
- Chartered Insurance Professional Definition
- Chartered Life Underwriter Definition
- Chartered Property Casualty Underwriter Definition
- Vehicle insurancePrivate Passenger Auto Insurance Risk Profile
- Underinsured Motorist Coverage
- Uninsured Motorist Coverage
- Omnibus Clause
- Health Maintenance Organization
- Capitated Contract
- Point of Service Plan
- Children's Health Insurance Program
- Disability Insurance?
- Credit Disability Insurance
- Life Insurance?
- Cash Surrender Value
- Absolute Beneficiary
- Acceleration Life Insurance
- Accelerated Benefit
- Accelerated Option
- Accelerative Endowment
- Charitable Gift Life Insurance
- Incontestability Clause
- Waterfall Concept
- Assumed Interest Rate
- Clean Sheeting
- Hazard Insurance
- Homeowners, Renters, and Fire Insurance?
- Participating Community (Flood Insurance)
- Insurance Considerations for Business
- Business Liability Insurance
- Commercial General Liability
- Liability Risk Retention Act
- Excess Insurance and Umbrella Insurance Policy
- Business Interruption Insurance
- Key Person Insurance Definition
- Own-Occupation Policy
- Self-Funded Health Insurance Plan
- Basket Retention Policy
- Commercial Blanket Bond
- Alternative Risk Transfer Market Definition
- Commercial Property Casualty Market Index Survey
- What are the primary obligations of the insurer?
- Earned Premium
- Reservation of Rights Letter
- Collateral Source Rule
- What are the primary obligations of the insured?
- Insurance Premium
- Affidavit of Loss
- What is the general structure of an insurance contract?
- Ambiguity Principle
- Accommodation Line
- What are the common disputed provisions in an insurance contract?
- Absolute Exclusion
- All Risks Clause
- What is required for the termination of an insurance contract?
- Risk Management
- Professional Risk Manager
- Associate in Management (AIM)
- Financial Risk Manager
- Forecasting (Business)
- Objective Probability
- Unconditional Probability
- Enterprise Risk Management (ERM)
- Operational Risk
- Business Recovery Risk
- Political Risk
- Asset Protection
- Performance Bond
- Barra Risk Factor Analysis Definition
- Above Ground Risk (Mining Industry)
- Bumbershoot Policy (Maritime)
- Abandonment Clause (Boat or Vessel)
- Bobtail Liability Insurance (Trucking Industry)
- Anti-Indemnity Statute (Construction)