In today’s global market, understanding the risks and liabilities involved with investing or providing programs is more important than ever. One of the fastest growing fields is actuarial science.
The Role of an Actuary
Most actuaries work with financial institutions or insurance companies to “measure, manage and mitigate risks,” according to the International Actuarial Association. Financial institutions accept risks, like providing loans to individuals or companies, as well as liabilities from death, auto accident or legal responsibility from a customer.
The standard practice is for companies to pool liabilities so there is a lower, shared risk — but a risk, nonetheless. That’s where an actuary comes in, using statistical models and analysis to help a company understand the variables and risk involved with taking on liabilities.
In the insurance market, actuaries help develop premiums, policies and claim liabilities. Many actuaries work on pension plan liabilities and can help determine the level of contributions it would take to finance a pension, healthcare provider or social insurance program.
Business students who show an interest in working with statistics and assessing the risks and liabilities a company takes on are prime candidates to become actuaries.
Where Does An Actuary Work?
Actuaries can work in a variety of places, from private companies to governmental and non-governmental organizations, to nonprofits.
Financial and insurance companies, as well as professional, scientific and technical service companies, employ the majority of actuaries. Typically, actuaries work in office settings with teams that often include managers and professionals from other fields, such as accounting, insurance underwriting and finance.
These companies use actuaries to manage their own risk, which is sometimes referred to as enterprise risk management. The statistical analysis conducted by actuaries could help the company avoid, manage and/or respond to any potential financial risk across all areas of the business.
For example, insurance companies use actuaries to analyze large amounts of data, including data from consumers’ medical, automobile or property insurance policies. The actuaries then use that data to better predict risk assessment, which can help the company set competitive prices, predict consumer behavior and make more accurate business decisions with future risks.
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What Do Actuaries Do?
An actuary can work in numerous roles within the profession. Below is a list from the International Actuarial Association of typical roles actuaries perform.
For life and general insurance:
- Establish estimates for unpaid claim liabilities, unearned premiums and other estimated liabilities and certifications
- Price insurance product premiums
- Surrender value calculations
- Manage pooled savings products
- Design and manage reinsurance programs
For health insurance, public health and healthcare management:
- Analyze product development, pricing, product management, premium adjustments, marketing and competition studies from every stakeholder’s perspective
- Study underwriting and reinsurance
- Analyze modeling, profit testing, reserving, solvency calculations, embedded value, financial forecasts and controls
- Engage in catastrophic claim, reinsurance, stop-loss insurance and high-risk pool analysis
For private pensions and other employee benefits:
- Offer advice to stakeholders on the design of occupational pension plans and other long-term employee benefits
- Examine funding requirements of occupational pension schemes and other long-term employee benefits
- Survey internal modeling
- Assess strategic asset management
For enterprise risk management:
- Take on responsibility for the company’s risk management
- Offer advice on setting company risk appetite and limits
- Create financial condition reports
- Build company risk models
- Perform financial stress tests
These are just some of the roles that actuaries fill, and while the field is competitive, the U.S. Bureau of Labor Statistics projects it to grow 22 percent by 2026, with more than 5,000 new jobs added to the industry.
Become An Actuary
With the field growing annually, now is the perfect time to look into becoming an actuary — and Campbellsville University can help you get there. Through CU’s fully online AS in Business Administration, online BS in Business Administration, online BS in General Business and online MBA degree programs, you can develop the expertise necessary to enter the actuarial science field. You’ll learn statistical analysis, communication, computer and problem-solving skills, and much more, all of which apply to work as an actuary. Students can choose an accounting emphasis with the bachelor’s in business administration program or an accounting specialization with the MBA program.
Courses are designed with the student in mind, and with Campbellsville’s flexible online format, you can balance the rigors of your academic work with your daily life.