YOU'RE probably not the only one scratching your head in response to this question. That’s why in this article, we attempt to explain all you need to know behind actuarial science, the intelligent application of maths and statistics to assess risk in financial situations. We’ll also explain why it’s becoming such a popular course choice for students.
Go on then - what is actuarial science?
Actuarial science is the application of mathematical skills to the social sciences to solve important issues for industries including insurance, government, business, and academic research. Essentially ‘actuaries’ (those accomplished in actuarial science) use statistics to predict uncertain events, for example, insurance policy income, pension scheme payouts, and stock market performance.
So why is it useful?
The role of actuaries is essential nowadays in making more accurate business predictions – their ultimate goal is to balance financial success with an acceptable level of risk. Actuarial science prevents businesses making reasonably blind decisions, and provides a fairer financial outcome for both business and consumers as outcomes are based on solid evidence witnessed over a period of time.
How do actuaries work?
Actuaries typically use tools from statistics, economics, and finance to measure and quantify risk, and subsequently manage it. It typically involves plenty of number crunching in order to provide the basis for decision-making for business activities, for example, choosing the amount of money a policyholder should pay for their insurance premium, or indeed the amount of return that they should gain. They are financial forecasters for businesses.
Should I go on to study actuarial science?
You should consider studying actuarial science at university if you’re interested in the mathematics of finance, probability theory, statistics, finance, economics, and computer science, and have a particular strength in mathematics. A growing number of universities are beginning to offer the course, and career opportunities at the end of your studies are bright and offer plenty of opportunities for advancement to management levels. Demand currently exceeds supply for actuaries, so you could reasonably expect to enter well-paid employment in the finance, investments, banking, or insurance industries.
