The Role of an Actuarial Analyst: A Closer Look at the Job

What is an actuarial analyst? What do they do and where do they work? How difficult is it to become an actuarial analyst? These are some of the questions we wish to answer in this article. Actuarial analysts work to assess and manage financial risk in industries such as insurance and pensions. They have a mathematics, finance, and statistics background to evaluate possible futures and their impact on the company.

Actuarial analysis is difficult and complicated, and those in this career must have a unique set of skills and pass numerous exams to get to that level. In this article, we will take a closer look at the job of an actuarial analyst, what responsibilities they have, how to become an actuarial analyst, and the future of an actuarial analyst.

Whether you are a professional who has been in the industry for many years or a student deciding what degree and career they will pursue, this article will hopefully provide some insight into this challenging but highly fulfilling career.

Understanding the Role of an Actuarial Analyst

An actuarial analyst is a professional who works in insurance, pensions, and other financial industries. They specialise in assessing, evaluating, and managing financial risk. Their knowledge of statistics and mathematics allows them to analyse datasets to find trends and patterns. After analysing the dataset, they can begin to build a model to simulate the future of this dataset, this model will also need maintenance and regular updates, using this model they can make predictions for the likelihood of events based on assumptions made by the actuary. Based on the calculations the analyst can make recommendations, but they cannot tell them explicitly what the outcome will be as that is impossible to determine.

The actuarial analyst’s role within the business is an important one, they help companies make informed decisions which will most likely lead to success. Being an actuarial analyst is a challenging and demanding career, and those who wish to pursue this position will need a specific set of skills and qualifications to back it up.

The Crucial Impact of Actuarial Analysts in Finance

Actuarial analysts are predominately in the insurance and pensions sector of the finance industry but are gradually becoming more necessary in other businesses. Actuarial analysts play a critical role in the business by providing insight into problems that seem unsolvable. By providing the probability of future events and how these different events will affect the business, the person making the decision can take this information and hopefully make the most effective choice.

These problems could vary from asset pricing, risk management, and new investments. Actuarial analysts provide an unbiased and fair point of view of the problem from a statistical perspective based on previous trends and future likelihoods. This is important for pensions and insurance as they are heavily based on future outcomes, they both assume the average person based on several factors will live to a certain age and calculate payments based on this age. If they underestimate the life span the pensions company would lose money and if they overestimate the life span, the insurance company would lose money. Overall, actuarial analysts’ role is crucial to companies’ stability in the finance industry.

Key Duties and Responsibilities of an Actuarial Analyst

The duties and responsibilities of an actuarial analyst vary from job to job, they still require the same skill set and educational background but an actuarial analyst’s role in a pensions company will differ from one in an insurance company.

Generally, actuarial analysts will build and maintain models, analyse data, and make recommendations based on their results calculated. They may be responsible for a client’s portfolio and communicate with the client and management. Monitoring any regulatory compliance to make sure they are within the law and if there are any changes to the law, they make the necessary changes to protect the company.

Actuarial analysts may also work with other experts such as accountants, financial experts, underwriters, and investment bankers. To summarise, the duties vary depending on the role the actuarial analyst performs within the company, but some aspects of the job are consistent throughout.

Essential Skills and Qualifications for Aspiring Actuarial Analysts

The role of an actuarial analyst requires a specific set of skills and qualifications to become qualified. The basis of an actuarial analyst is an excellent understanding of mathematics especially statistics as this will be applied to most aspects of the job. With a solid mathematical base, they will need a strong grasp of statistical methods and where they apply, analytical skills and use these in a financial scenario. The actuarial analyst must be able to analyse the data and use this information to make decisions based on the risks.

After the technical aspect, the actuarial analyst must be able to effectively communicate these complex concepts to clients, management, or stakeholders who may not have the same knowledge as the analyst. Regarding softer skills, an actuarial analyst will need interpersonal skills, teamwork skills, time management, and adaptability.

For educational requirements, a bachelor’s degree is needed for entry-level roles, such as mathematics, finance, statistics, economics, or in a related field preferably a degree in actuarial science and risk management.

Career Advancement: Professional Development for Actuarial Analysts

After the degree and securing a role in an actuarial environment, you can begin taking the actuarial exams and depending on your degree you may be applicable for exemptions from some of the exams. Under the IFoA you need the first ten core exams to become an associate and then specialise and pass three more exams to become a fellow as seen below. You can find more information here.

You do not need to take all the exams to work as an actuarial analyst, but it is encouraged as you will have a broader and better understanding of what is important in an Actuary and the work you are carrying out.

Work Environment and Lifestyle of an Actuarial Analyst

Actuarial analysts will most likely work in an office setting for pension companies, financial institutes, or insurance companies typically in the larger cities such as London, New York, Kuala Lumpar, Chicago, Hong Kong, Singapore, Boston, Toronto and Dublin. Most of the time they will work as part of a team, although in smaller companies you may work solo.

The work environment is fast-paced trying to meet deadlines, you may need to work longer hours to meet these deadlines but generally, it will be a forty-hour week. In some cases, you may be asked to travel outside of the office and meet with clients or other firms.

The landscape is starting to change after the impact of COVID-19, people are starting to work from home and travel less to the office, also more meetings are being held online so in a few years it could be a different environment.

Is the Actuarial Analyst Career Right for You?

If you are considering a career in the actuarial industry this section will be aimed at you, it is a huge decision and it is important to understand whether the role is best suited to you. Actuarial analysis is a challenging field but don’t let this discourage you as it is also a rewarding career. The work you will be doing is intellectually stimulating and has a huge impact on the success of the business, you will also be well compensated for your work.

According to Glassdoor the average actuarial analyst salary in the UK is £39,592 which is well above the average as you can see below. As discussed before, you will need a strong mathematical background and a bachelor’s degree in a similar field to actuarial science. If you enjoy problem-solving, data analysis, building, and manipulating models, have strong IT skills, and are comfortable to be working in a fast-paced and constantly changing environment, then a career as an actuarial analyst would be a good fit.

There are also plenty of opportunities for career development from continuing the exams to online courses and webinars provided by actuarial organisations. Lastly, I encourage you to do your research and if possible, get in contact with an actuary or someone working with actuaries to get a good feel for the work.