What is an actuary?
Posted October 13, 2011, by Elissa Collier
An actuary is one of those jobs that you’ve heard of but you’re not quite sure of exactly what it is. You assume an actuary would be pretty good at maths and statistics and probably earn a lot of money, but that is as far as your knowledge of this career stretches. Want to know more?
There is a fair amount of uncertainty regarding future events – and this is where an actuary steps in. No, an actuary is not a psychic. Actuaries use mathematics and statistics to determine the likelihood and risk of a particular event occurring and provide solutions and recommendations based upon their findings. Read on to find out all you need to know about actuarial studies and this challenging profession.
Actuaries use mathematical expertise, statistical knowledge and economic and financial analysis to identify risks and uncertainty. They need to have impeccable complex problem-solving skills in order to find solutions to unforeseen events that can occur, and need to be very analytical to be able to assess and minimise the impact of risk. They also need to be decision-makers as they weigh up a number of alternative solutions before choosing the most appropriate one.
According to the Wall Street Journal’s 2009 study of the best jobs in the United States, actuary comes in second place. The study took into account five main criteria – environment, income, employment outlook, physical demands and stress. This job has consistently rated in the top jobs over the years, so if you’ve got what it takes it’s a pretty good career!
Where would I find an actuary?
Traditionally, the majority of actuaries could be found working for insurance companies. People reduce their risk of financial loss by taking out all kinds of insurance, and actuaries evaluate the probability of this risk and design insurance policies, premiums and procedures. They have to calculate the amount of funds an insurance company needs to have in the likelihood of a claim being made.
But insurance isn’t the only industry you will find an actuary. They work for commercial and investment banks to analyse the long-term risk of investments, predict cash flows and liabilities. They are in the legal industry at court cases to determine economic losses in the form of wages and compensation. They could work in the building and construction industry analysing the financial risks and benefits of a manufacturing company purchasing an expensive piece of equipment. Actuaries work for government agencies, retirement funds, superannuation, universities and health care – their workplaces are widespread and varied. They don’t always have to work for a large organisation either – a lot of actuaries are self-employed and do consulting work.
Actuaries will also become increasingly involved in the global green movement, such as policy responses to climate change. As the climate change emphasis swings from science to economics, actuaries will be key components of multidisciplinary teams and help to set carbon prices as well as assess the budgetary impact of the increased incidence of disease.
How do I become an actuary?
The governing body for actuaries is the Institute of Actuaries in Australia. To qualify as an actuary in Australia you must complete the Institute’s Education Program, which is comprised of five parts.
Firstly, you must enrol in an undergraduate degree in Actuarial Studies or a Bachelor of Commerce majoring in Actuarial Studies. This must be completed at one of five accredited universities – Macquarie University, University of New South Wales, University of Melbourne, Curtin University or Australian National University (with Monash University soon to come on board). It’s important to note that you are not an actuary until you complete the next steps.
The remainder of the program is completed through the Institute and involves a combination of specialisation, practical experience and a professionalism course. After the steps in the program are completed, students qualify as a Fellow of the Institute of Actuaries of Australia (FIAA).
How much can an actuary earn?
Once you are fully qualified you can make a very good income in this field. While students and graduates of an actuary undergraduate degree can earn around $55 000 to $70 000, once you have completed all stages of study and are qualified as a Fellow, you can earn anything from $65 000 – $100 000 per year, according to the Institute of Actuaries in Australia. A senior actuarial professional can earn around $200 000. According to the Australian government’s job outlook website, the average weekly earnings of full-time actuaries is $1265, or approximately $150 000 (before tax).
While the total number of actuaries in Australia is only small (around 7000 in August 2008), the profession has been growing strongly, according to the government’s job outlook website. Additionally, every country needs actuaries so you can use your skills around the world.
Being an actuary is a highly respected, rewarding and varied profession. If you’re an analytical person and a creative thinker who is good at maths, why not give this career a go? For more information on actuarial studies, check out the Institute of Actuaries in Australia website.