Actuaries tackle the risks and uncertainties that financial businesses face, working in the interest of both customers and owners. Actuarial skills are increasingly recognised across industries, meaning that the range of employment opportunities is always growing. Some of the traditional areas include pensions, insurance and investment.
However, damages, healthcare, personal finance planning and risk assessment are all new areas in which the effective contribution of actuaries has been recognised.
Where do actuaries work?
There are currently 12,760 fellows of the Institute and Faculty of Actuaries (IFoA), with 72% based in the UK and Northern Ireland and 28% based elsewhere.
Consultancies are probably the biggest employers of actuaries in the UK. Actuarial consultancies offer a range of services to their clients including advice on issues such as mergers and acquisitions, corporate recover and financing capital projects. Many also offer advice to employers and trustees who run occupational pension schemes.
In an increasingly global business world, mergers between life companies are becoming more frequent. When life offices are bought and sold or life funds merged, actuaries tend to be retained by both sides.Working in companies that provide life insurance, pensions and other financial services is a traditional area for actuaries. They are involved at all stages of the product development, pricing, risk assessment and marketing of the products.
Actuaries also fill key roles in financial management and the investment of policyholders’ money by developing strategies that ensure customers get a good return.
This is a fast-growing area for actuaries, both within insurance companies, consultancies, and at Lloyds of London, an insurance marketplace that consists of multiple financial backers grouped in syndicates, which then pool and spread risks. Lloyd’s mainly deal with general insurance and reinsurance.
General insurance includes personal insurance, such as home and motor insurance, as well as insurance for large commercial risks. You can also find roles in reinsurance and broking operations.
There are many different factors that can affect the size and number of claims, and general insurance companies will employ actuaries to assist with their financial management.
Actuarial and statistical techniques are used extensively in the analysis of often substantial amounts of available data. Statistical models are thus a key part of an actuary’s work. This analysis is then used to rate risks and to ensure that claims reserves are adequate to meet the eventual settlement of insurance claims. Terrorist attacks, natural disasters and industrial diseases are all examples of insurance liabilities where actuaries have been integrally involved in estimating ultimate costs into an uncertain future.
As the pensions sector becomes ever more complex, there is an increasing demand for specialist advice to those businesses running pension schemes. Therefore, actuaries are heavily involved in designing and advising on occupational pension schemes. This could be anything from a formal valuation for one person’s benefits or for a whole scheme with one million members.
Finance and Investment
Actuaries have been involved in the field of investment management for decades. They are involved in buying and selling assets, investment analysis and portfolio management. In addition, actuarial techniques are ideal for use in measuring investment performance.
Although generally regarded as the province of the investment banker, actuaries can add value in this area. An actuary’s basic skills in forecasting and assessing risks are ideal for estimating whether a capital project, such as a new hospital, is financially viable. Employers might include government departments, management consultancies, or property companies specialising in this area.
The demand for actuaries in the banking field is growing. As an increasing number of insurance companies have their own banking operations, many actuaries are now filling some of the senior roles in finance and risk.
Actuaries are now also found in retail banks, as many are recognising that the longer term approaches advocated by actuarial professionals can add value to their businesses. And, with insurance companies hedging their risks, there has been an increased demand for actuaries from investment banks that provide hedge products.
An actuary’s aptitude for analysing specific risks makes them well suited to work in risk management.
They develop models that they can leave with a business to minimise their own future risks. An actuary will then have to explain the model well enough to the business so they can use it to full effect, so the ability to convey complex information in layperson’s terms is vital in this role.
Go to areas of work to find out more about all of the different industries in which you could find yourself working in as an actuary.