03May2012
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SOA Blog
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General
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What is an actuary?

What is an actuary?” While actuaries are used to hearing this question, it’s now reverberating throughout c-suites and boardrooms. Confronted with questions that would twist Solomon’s stomach into knots, executives are finding that actuaries are professionals that can help them understand, analyze and mitigate risk.

Usually, this risk relates to the financial impact of a potential future event. Through a deep mathematical analysis, business assessment and understanding of human behavior, actuaries are able to determine how best to value and mitigate potential threats.

Some companies have caught on early, and it has set off a boom in hiring. According to the Bureau of Labor Statistics, the number of job openings for actuaries is expected to grow by 27% [1] through 2020, which is almost double the average national growth rate for other occupations.

Here are three critical roles actuaries are playing to mitigate corporate risk:

  • Maintaining financial health during economic downturns: The 2008 global financial crisis was a culmination of many factors and we are still reeling from the resulting recession. With the uncertain commercial environment, actuaries are crucial in determining capital reserve needs when assessing the financial, reputational and operational risks presented by market volatility.
  • Understanding ramifications of health care decisions: It is an election year, which means we have already been thrust into multiple health care debates as well as a Supreme Court decision on the constitutionality of the 2010 federal health care reform law. Actuaries are a critical participant in these debates because of the unique skills they bring to the table including understanding affordability and accessibility.
  • Anticipating the financial implications of our aging population: According to the U.S. census, the population of people between the ages of 45 and 64 grew from 2000 to 2010 by 31.5%, and currently makes up more than 25% of our total population [2]. Many members of this generation have not effectively planned for retirement, which will impact how companies and individuals manage pension plans, health care options, and retirement savings accounts.


What are the thorniest questions you see executives facing in 2012? Your comments are most welcome.


[1] Source: http://www.bls.gov/ooh/Math/Actuaries.htm

[2] Source: http://2010.census.gov/news/releases/operations/cb11-cn147.html

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