Help insurance companies and banks cut down on risk.
What does an Actuary do?
An actuary works with businesses to reduce the amount of risk they take. As an actuary, your goal is to evaluate future risk, reduce the likelihood of catastrophic events, and decrease the impact when these events occur. This is seen most often in the insurance industry, but banks and other companies use your services too.
Let’s say, for example, you are an actuary for an insurance company. Your job is to consider the risk in providing certain types of insurance to certain groups of people. What are the probabilities of making a profit from a dental plan? If your company provides flood insurance, are there areas of the country where you could expect claims? Does the company have enough assets, equity, or cash to pay potential claims? With these answers, you help the business develop a plan that covers exigencies and then you advise them on what premiums to charge for that coverage. After all, the obvious risk is the threat of paying a claim, but another risk is setting the premiums at a rate that will deter potential customers.
In the banking industry, your skills are used to advise firms about particular investments. You evaluate the risk of the investment compared to the potential rate of return and present your conclusions.
While you would be handed a Superman cape if you could extinguish all risk, minimization is a more realistic expectation. You establish plans for the “what ifs” so that individuals and business executives can sleep at night.