Actuaries are valued across a range of industries and there are a variety of sectors that you can work in should you decide to pursue a career as an actuary.
So is banking one of these industries? Can actuaries work in banks?
In this article we look at what an actuary is, where they work and whether they can apply their skillset to the banking industry.
What is an actuary?
An actuary predicts and measures risk. They analyse data to predict emerging risks for businesses, then help put financial safeguards in place to reduce this risk.
They tackle the risks and uncertainties that financial businesses face and work in the interest of both the customer and the owner of the business. You can find out more about the role of an actuary here.
Where do actuaries work?
Traditionally, actuaries are found in the pensions and insurance industries. The pensions sector has become increasingly complex, and the actuarial skillset is in high demand. You will find that actuaries are heavily involved in designing and advising on occupational pension schemes which could include anything from formal valuations for one person to a while scheme with thousands of members.
Insurance is another industry where actuaries will always be in demand. Actuaries working in life insurance, for example, may be involved in the pricing, risk assessment and even the marketing of products, or they may be involved in developing investment strategies to ensure customers receive a good return.
An actuary working in the general insurance sector, however, may be involved in estimating costs for a variety of events, from terrorist attacks to natural disasters. They will analyse data to rate risks and ensure that claims reserves are adequate to meet insurance claims. For more information on working in Insurance, visit Insurance Careers.
As mentioned, actuaries are branching out into a range of industries, and one of these is the finance industry.
Actuaries have been regularly involved in investment management as actuarial techniques are used in measuring investment performance. Other roles an actuary could take in investment is buying and selling assets, investment analysis and portfolio management. You may also find actuaries in corporate finance, working in areas including mergers and acquisitions or capital management. An actuary can bring strong understanding of financial issues in insurers and other financial institutions.
So those are some of the areas you may find yourself working in as an actuary. But what about banks?
Can actuaries work in banks?
The short answer is yes, actuaries can work in banks.
The demand for actuaries in the banking field is growing and many are now filling some of the senior roles in finance and risk.
There are various roles within banks and the finance industry that actuaries can take. Actuaries may be employed by large financial institutions to assess risks on loan products. Alternatively, they could be used to measure the potential loss in an investment portfolio.
Some actuaries may move into financial analysis and work with a range of businesses and investors in areas including regulations, markets, investments and economics. The main aim of a financial analyst is to provide accurate information and make recommendations based on that accurate information.
Insurance companies are increasingly hedging their risks and this has resulted in an increase in actuaries from investment banks providing hedge products.
Can an actuary become an investment banker?
We’ve established whether actuaries can work in banks, but what about if you are an actuary looking to make the move into investment banking?
Investment banking involves a lot of risk, which means that an actuary could be well suited to this role. A qualified actuary who becomes an investment banker is well equipped to assess the risk attached to mergers and acquisitions or investment in hedge funds. They will have the mathematical and modelling skills and experience to understand the financial element of investment banking. They will also have the skills and ability to predict future cash flows making decision making much easier.
However, while an actuary may have the mathematical ability and analytical skills needed, a career in investment banking requires the ability to sell and to work as a bridge between clients. An investment banker works long hours, will travel a lot and will undertake tasks including acting as an intermediary or finding clients for stocks and funds.
On the other hand, actuaries are consistently ranked as having some of the best jobs out there due to a high wage, good work life balance and low stress levels, so whether they would want to give this up for the life of an investment banker is debatable.
In conclusion, actuaries can work in banks in a range of roles, including measuring the risk of investments, getting involved in mergers and acquisitions or creating hedge products. Their skills could also serve them well should they make the move into investment banking. However, the world of investment banking is a stressful one, so whether an actuary would want to leave their high job satisfaction and low stress level for the world of investment banking is another story.