Risk management is an important responsibility in today’s corporate world because there is uncertainty associated with every business decision. Whether deciding to make 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. Therefore, businesses seeking to quantify risk 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.
Top Actuary Skills Needed to Start Your Actuarial Career
1. Analytical Skills
Actuaries need exceptional analytical skills to assess prevailing situations through a sound methodology. Comprehending the forces driving the current environment is important to formulate 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 becoming an actuary is likewise lengthy and complex. Still, you will find remuneration on the far side of $80,000 per annum on the far side of the certification process. Nothing will come of your analysis if you can’t communicate your thought process–or at least the results.
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 relevant information. If you have a subtle grasp of the differences between large and small business tendencies and needs, or the trends in real estate data you have at your command, you will prove yourself an asset nearly anywhere. Actuaries with good business knowledge can often advance rapidly because they can communicate effectively with the decision-makers that run businesses. Business knowledge is especially portable, expanding your likely job options. Patience may be necessary if you want to start your own business and/or CFO, as there is something of a grind to get through the process of working up the actuarial ladder before you can strike out on your own.
3. Understanding Human Behavior
To make accurate forecasts, actuaries must be able to understand general human behavior. Psychology, therefore, plays an important role in the actuarial analysis. For example, if a commercial real estate business wants to optimize the indoor temperature of its facilities, 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, which could lead to moving elsewhere. Actuaries who understand the dynamics of human behavior can compute more accurate forecasts and, therefore, carry out their responsibilities more effectively. When you have a kind of literacy, a command, you may take advantage of how you perceive the needs and desires of others. To be a solid professional, you need to have a compass for how you wield your observational powers.
Establishing a career as an actuary requires strong math skills for the advanced calculations fundamental to this profession. Therefore, individuals seeking to become an actuary 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 in a business-related major and a science-oriented one.
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. Ideally, once you have been through the process, thoughtful decisions will be expected. Your cast of mind likely shades toward a careful process-oriented approach. You typically do not come across a hasty actuarial. Coursework in economics can help boost this skill since, in simple terms, economics is the science of making the best decision possible, knowing that people are fallible and resources are not without limit.
6. Communication Skills
Any teacher will tell you that you can have the correct answer, but if you can’t communicate it to the necessary audience, it’s useless. So, in addition to the skills listed above, good communication skills are a must for any would-be actuary. Classes on composition and public speaking are just as valuable as finite math and calculus in your studies. Don’t be afraid to record yourself and get feedback from trusted friends or colleagues that can give you the constructive criticism you need to move forward in this critical front of the business world. Certainly, you do not need to study the subject if you are a natural — beware of overconfidence, of course. Perhaps no other skill gives one too much confidence as successful personal communication.
7. Cost-Benefit Analysis
Thorough training in the analysis of mountains of data will be essential to your ability to analyze specific categories of costs and benefits. If you can produce a good cost-benefit analysis, it is a skill to be valued. Being able to weigh the good and the bad and come to a rational decision is just about the whole ballgame for actuarial work. Similarly, if you’ve started and/or run a business, you have likely honed your entrepreneurial confidence and spent a moment or two, running the numbers yourself, on life as your own boss versus life within an organization.
8. Good Instincts
Knowing when to trust your gut is also a skill that maybe can’t be taught, but if you have this, it too can serve you well. Follow your intuition and your training and see where that gets you. Experience (see below) is a good instructor to the gut. With each test you pass and each module or professional education you complete, your ability to make actuarial decisions will grow. Lean into your training, and listen to what the data is telling you, which may or may not be what the bosses want to hear.
Well, how do I know when to trust my gut? This is where your years of training and schooling come into play when you have done all the calculations, and something still feels “off.” Submit your estimations and your misgivings to the higher authorities and then let it play out how they decide. Actuarial science is built and formatted so that actuaries are not put into positions that they are not qualified for. If it is put in front of you, you should be able to handle it. This is what you have studied and tested and spent time away from home for. Each level of academia and the business world appears to give special credence to valuable experience. Nothing shores up confidence and wisdom like having paid some dues and learned.
Self-discipline is the skill called off the bench when your experience and your gut tell you that the situation is a no-go, but the boss still says “go.” Maybe you are wrong, and it’ll all be fine. Maybe you are right, and the wheels will come off, but you have to fall in line and support the organizational line after a certain point. Self-discipline means keeping all those “I told you so” and “what about…?” statements to yourself. Time management is another valuable part of self-discipline. If you routinely come to the correct answer but do so only after the information has become moot or self-evident, that is as good as not doing the work at all. Having an orderly sort of mind would be an asset in this field.
One of the most crucial skills to sharpen in your career is to prepare for the next examination necessary to get to the next level. The intensity of the 13+ exams will be a measure of your ability to endure. The study aids and materials are energetically supported and maintained, and it will serve you well to take advantage of one that suits your learning style and personality. Broadly, the tests are two basic levels. Some positives to focus on: your test results never expire; you can take them as often as necessary, and there is no age limit as to when you can start. There is no time like the present, whether that time is the raw springtime of youth or the seasoned autumn of having life experience under your belt. As with any exam, register early and be sure of the time and location.
Paying Professional Society Dues on Time
An actuary is a job with a very detailed process for becoming. First, you pick a major, preferably at an A or B program according to rankings by the Society of Actuaries. Upon graduation, you start taking the battery of tests offered by that organization or the Casualty Actuary Society. When you have passed the first bunch of those tests, you look for a job, where they will help you pass the second battery of tests over the next 4-7 years. Each test is 3-4 hours long and takes an average of 400 study hours to prepare for. Now you may call yourself a Fellowship Actuary, and you may prepare for further membership in the American Academy of Actuaries, provided you can get a current member to vouch for you. The Conference of Consulting Actuaries is for those who have struck out on their own to hang a consulting shingle. And finally, the American Society of Pension Professionals and Actuaries is for those who work in pension-related fields. These memberships are critical to your ongoing training as an actuary. In some cases, your membership dues may be underwritten or wholly handled by your employer.
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 the door towards advancement to higher levels in an organization, including executive positions and leadership roles. Therefore, individuals seeking to become an actuary should start by laying out a long-term plan that first seeks to acquire prerequisite skills and then gains the specialized knowledge required of actuaries.
Each of the above skills has everything in common with the rest. Your challenge will be addressing concerns regarding your potential shortcomings. It takes self-discipline to develop a real understanding of your strengths and things to work on. It’s up to you how to manage your time – e. g., is it worth it to overcome your fear of tests? Your skills in cost-benefit analysis will foretell your path to a career in actuarial statistical analysis. You might choose, in fact, to do what best pleases your desired work-life balance. After all of these self-assessment methods, you will be able to choose from insurance to finance to the academy based on what your skills mean to you.