Risk management is an important responsibility in today’s corporate world because there is uncertainty associated with every business decision. Whether deciding to make a capital investment or hiring more employees, the risks must be carefully considered to prevent making a mistake that could lead to astronomical losses. Actuaries use math and statistics to determine the mathematical probability of a loss or disaster occurring. Businesses seeking to quantify risk, therefore, must hire actuaries to forecast the consequences of their approach to a wide range of activities. Since actuaries are responsible for helping businesses make the most important decisions, the actuarial profession is in high demand.
1. Analytical Skills
Actuaries need exceptional analytical skills to assess prevailing situations through a sound methodology. The ability to comprehend the forces driving the current environment is important to formulating the initial base needed to start an analysis. Actuaries then have to use the information they gather to make calculations that are relevant and accurate. The process of conducting an actuarial analysis is complex, so the skills necessary to do this can take many years of experience to acquire.
2. Business Knowledge
Actuaries work directly with decision makers to help them prevent mistakes and determine the right courses of action. Therefore, individuals aspiring to become an actuary must possess adequate business knowledge to ensure that they can provide information that is relevant. Actuaries with good business knowledge can often advance rapidly because they can communicate effectively with the decision makers that run businesses.
3. Understanding Human Behavior
To make accurate forecasts, actuaries must be able to understand general human behavior. Psychology, therefore, plays an important role in actuarial analysis. For example, if a commercial real estate business wants to optimize the indoor temperature of its facilitates, the cost of heating and cooling is not the only metric relevant to profitability in this case. Customers may feel uncomfortable if the temperature is not aligned with their preferences, and this could lead to some of them moving elsewhere. Actuaries who understand the dynamics of human behavior can compute more accurate forecasts and, therefore, carry out their responsibilities more effectively.
Establishing a career as an actuary requires strong math skills for the advanced calculations that are fundamental to this profession. Individuals seeking to become an actuary, therefore, must possess or acquire a deep understanding of math before entering the field. Advanced calculus and linear algebra are minimum requirements for actuaries, and learning even more advanced math can facilitate better job performance and higher pay. Many successful actuaries start as either a math major or a dual major.
Many tasks require actuaries to make important decisions on their own. In fact, actuaries often become decision makers themselves because of the skills they acquire through their training. Employers expect actuaries to enter the profession with a significant background in decision-making. Experience working as a decision maker is ideal, but individuals seeking to become an actuary should at least have some formal schooling in management and decision-making processes.
Preparing to Be an Actuary
Actuarial science is a high-paying field because of the degree of specialization necessary to complete the job requirements demanded by employers. However, individuals who enter the actuarial profession with the right skills can expect to lead a very prosperous career. Working as an actuary can open to door towards advancement to higher levels in an organization, including executive positions and leadership roles. Individuals seeking to become an actuary should, therefore, start by laying out a long-term plan that first seeks to acquire prerequisite skills, then gains the specialized knowledge required of actuaries.