Definition of An Actuary Unveiled: What You Need to Know

Explore the pivotal role of actuaries in shaping financial stability and risk management across industries. We examine the essential skills, ethical standards, and evolving opportunities in this insightful guide as we explore the definition of an actuary.

Actuaries use statistics to predict and model the financial risk and liabilities exposure of an event occurring. From these findings, they can come up with an analysis for companies or individuals to manage and reduce the risk of these events taking place, for example, help an insurance company manage the risk of potential costs of an earthquake occurring. The terms financial risk and statistics scream the use of mathematics, and yes, you’ve guessed it, Actuaries are very mathematically inclined.

At present, actuaries use a range of different methods to help them model financial risk and evaluate outcomes. These methods could be different coding platforms such as R Studio, Python and SAS, and a basic understanding of these coding languages really are essential in any actuarial role, especially in a more technical based role. The different software is not only used to model the data, but also to automate processes and can really help actuaries manage their time more efficiently and complete tasks quicker. Different companies use different coding languages, but one essential skill that is universal to actuaries is the ability to use Microsoft Excel, which is used on a daily basis by the majority of actuaries.

As discussed below, the role of an Actuary does not fit a singular box, and actuaries have the chance to work in a variety of different areas. Actuaries are an essential part of many different industries, more commonly insurance, finance, and consulting:

• Depending on the company, an actuary may have a role in consulting or have a more technical role. A consulting actuary is involved in working and meeting with clients, whereas an actuary in a more technical role would spend their time working independently and being part of projects within their team.
• Actuaries working in insurance are involved in various aspects of the business, and are split into teams such as pricing, reserving and operations. The types of insurance companies that actuaries work in are pensions, life, general, health, reinsurance and more.
• The finance industry provides a different role for actuaries, giving them the chance to work on risk management in relation to investments and hedge funds.

It may come as a surprise that Actuaries also have a role in government and healthcare:

• Actuaries work on being able to advise the government on the pensions of individuals working in the public sector, as well as play a part in many other government decisions in relation to climate change and using risk analysis techniques to perform a climate scenario analysis.
• Actuaries in healthcare are involved in evaluating the risk and providing solutions for a range of different scenarios, such as private medical insurance and whether or not an individual needs long-term care insurance.

Understanding The Actuaries’ Code: Core Principles Defining the Actuary Profession

The Actuaries’ Code is the ethical Code of Conduct that members, and also individuals working to become members, of the Institute and Faculty of Actuaries must abide by. It gives individuals guidance of the standard that they most hold themselves to, and how to apply these standards to the work that they carry out. The code has six principles, and these are as follows:

Becoming an Actuary: Qualifications and Skills

If you are considering pursuing a career in Actuary, you may be thinking “Do I have to study an actuarial degree?”. The answer is no. Although studying the actuarial degree can lead to you being able to obtain exemptions from the professional actuarial exams based on performance throughout your degree, it is not essential to becoming an actuary. There are multiple other paths that could lead you to become an actuary, for example similar degrees such as Maths & Statistics, Finance, Maths with Finance, and many more. There is a trend with these degree paths in that they all centre around maths and problem solving, which in reality are the key expertise needed to pursue an actuarial career path.

Although the most common, studying a mathematical degree at university is not the only path that can be taken to become an actuary. Some opt to secure an apprenticeship, namely an Actuarial Technician (Level 4) Apprenticeship. These are for an entry-level role and normally last 2-3 years depending on experience. Another way to become an Actuary is for people who may not have a degree related to maths but feel that this career path is for them. The Institute and Faculty of Actuaries has the option for people to take their non-member exam which allows them to get an understanding of the level of mathematical skills needed to complete the professional actuarial exams.

If you are in a position to pursue actuary as a career, there are 13 professional exams to complete before you can be known as a Fellow of the Institute and Faculty of Actuaries. Each year there are two exam periods, in April and September. Although you can complete the exams as quickly or as slowly as desired, you need a minimum of 3 years personal and professional development (PPD) to be known as a Fellow.

As discussed above, certain degrees such as the actuarial degree will allow you to obtain certain exemptions, which definitely makes post-university study more bearable. These first professional exams provide you with the basis of the essential skills and techniques required to progress in the process of becoming an actuary. The CS exams are based on Actuarial Statistics, CM exams are on Actuarial Mathematics and the CB exams are on Business Finance, Business Economics and Business Management respectively.

However, you must complete the professional skills stage 1 course before you would be able to sit the CB3 exam. The next exams that must be completed are known as the Core Practice exams and entail CP1, CP2 and CP3.

At the completion of the core practice exams and 2 years of personal and professional development (PPD) you are now known as an Actuarial Associate and are one step closer to becoming a qualified actuary. At this point you can choose to sit 2 of the specialist principle subject exams.

So far in your career, you will have had the professional experience to be able to narrow your career path and specialise in your chosen principle subjects. For most individuals taking these exams, they make the choice based on the type of company they currently work at. For example, if they work in a life insurance company, they may choose to sit SP1 and SP2 as these would have the most relevance to their work.

SP1: Health and Care

SP2: Life Insurance

SP4: Pensions and other benefits

SP5: Investment and Finance

SP6: Financial Derivatives

SP7: General Insurance Reserving and Capital Modelling

SP8: General Insurance Pricing

SP9: Enterprise Risk Management

The final exam needed to be completed is known as specialist advanced subject. The choices of these are:

SA1: Health and Care

SA2: Life Insurance

SA3: General Insurance

SA4: Pensions and Other Benefits

SA7: Investment and Finance

Upon the completion of this exam and a total of 3 years of PPD then you have completed the everything needed to become an actuary and are now a Fellow of the Institute and Faculty of Actuaries.

Beyond the Numbers: A Broader Definition of Actuary Roles

A qualified actuary and a successful actuary are two different things. Although the level of understanding and qualifications of mathematical and technical skills needed to become a qualified actuary are essential, there is a lot more required in order to become a successful actuary.

In any industry, an actuary works as part of an intricate team and in order to work successfully together they must be able to communicate and work as part of a team. Part of an actuary’s role is their involvement in company projects that require collaboration with other members of their team, as well as teams in other departments throughout a company. As well as being able to collaborate with colleagues, some actuaries will also need the skills to be able to work with and communicate well with clients.

As part of the work of a consulting actuary, you would be involved in meeting and interacting with clients, and in this role good communication skills are crucial. These clients will not usually have the level of knowledge and understanding of the role that an actuary plays and so being able to provide comprehensive explanations to clients is essential.

There are many other interpersonal skills that will help you in pursuing a career as an actuary such as decision making, time management, problem solving, to name a few. The actuarial professional exams are finite, but there is no end to the personal development that will help you become a better actuary.

Financial Rewards: Exploring the Definition of Actuary

Actuaries are on average quite well paid for their efforts, with the starting salary for an actuary based in the UK being very competitive for graduate jobs. For an individual making a start to qualify as an actuary, and as they make their way through the professional exams, with every exam completed their salary will increase. As you could imagine, the increase in salary coinciding with passing an additional exam is a great incentive and motivator for any individual pursuing to qualify as an Actuary. The rate at which salaries increase by may vary between companies, and most companies that employ part-qualified actuaries also provide exam revision materials and tutorials to help their employees have the best chance to succeed.

As well as providing employees with revision materials, most companies will also give employees an allowance of revision days. This may vary between exams that are being taken as the amount of content needed to revise changes, but most individuals will take one study per week as an exam looms closer, or alternatively others take two half days per week. All of this support from the companies that actuaries work for show their level of understanding of how much pressure taking these exams can put on an individual, and the help that they provide is crucial for many actuaries passing their exams. Before taking an actuarial job it’s a good idea to get clear on what the actuarial study package looks like. In particular the study days off and exam linked pay rises

A fully qualified Actuary in the UK can expect a very competitive salary, though this may vary on location and company. For instance, an actuarial manager could earn upward of £100,000 (particularly in locations such as London), and a Chief Actuary or Partner could earn upward of £200,000.

Defining Life as an Actuary: Insights into the Profession

Working as an actuary provides many benefits to an individual’s life. For example:

• Actuaries secure an above average salary with many opportunities to progress in their field.
• Actuaries can find a good work/life balance, especially in recent years when working from home became an essential part of work life for an actuary, and continues to be, with most companies continuing to implement a hybrid working environment.
• The actuarial career is international, and there are many opportunities to travel and work all over the world in cities such as New York, Chicago, Singapore, Sydney, Dublin, Hong Kong, Kuala Lumpar and Toronto where actuarial jobs are plentiful.
• Most actuaries have job security. Since it is a relatively small industry and a very essential job to many sectors, there will always be a demand for actuaries. This also explains why the higher salaries are provided for an actuary’s expertise.
• The daily work of an actuary is varied and challenging, with many opportunities to learn and get involved in ongoing projects.

Similar to any job, there can be times of stress and anxiety whilst working as an actuary. There are many factors that can contribute to this, for example:

• Project deadlines and responsibilities can cause stress if an actuary is experiencing a heavy workload and struggling to meet their targets.
• The pressure of ensuring that the precision of the results that actuaries produce meet the requirements. This is extremely important as their findings are used as a basis in decision making in many different work environments.
• An actuary who works in a consulting firm may have the additional pressures of dealing with different clients and their needs, whilst an actuary in a more technical role may have additional stress in relation to software or coding issues, and also the pressure of working with various colleagues on ongoing projects.

In most cases, these stressful time periods that actuaries go through are usually just that – time periods. Many companies experience a “busy season” where actuaries will find that their workload will be at a peak. For the majority of their careers, actuaries are a part of an encouraging work environment that allows them to work hard and meet deadlines whilst also maintaining a good work/life balance.

Definition of An Actuary: Present Challenges and Future Opportunities

At present, an actuarial career is a high in demand role, and according to the US Department of Labour, Bureau of Labour Statistics, it is projected that employment opportunities for actuaries will increase at a much higher rate than the average. In all industries that actuaries work in – finance, insurance, government, healthcare and more – their role is an essential part of the company and from this, actuaries can comfortably have job security.

From a future perspective, the role of an actuary will continue to be an essential one. The many industries that actuaries work in will continue to need methods to manage and analyse risk to aid their decision making. In terms of the new technological advances that the future will bring, especially in relation to AI and machine learning, there will be new opportunities for actuaries to develop their skills to remain a crucial part of the business cycle.

In terms of an actuary’s role in government, actuaries will continue to aid in future events and scenarios that are most likely to arise, for example climate change and cyber security. Overall, it is evident that at present and in the future, actuaries are, and will continue to be, essential to businesses in various industries.

Wrapping Up: The Essence of the Definition of An Actuary

The formal definition of an actuary is as follows: Actuaries are problem solvers and strategic thinkers, who use their mathematical skills to help measure the probability and risk of future events. They use these skills to predict the financial impact of these events on a business and their clients. Anyone pursuing a career as an actuary can expect a challenging and diverse workload, and the opportunity to travel and work internationally. Although the road to becoming a qualified actuary is a long one, with many professional exams to get through, the outcome is a very rewarding and satisfying career.

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