Actuarial analysts work for primarily for insurance companies and financial institutions using their statistics knowledge to predict potential risk for their employers. This work requires advanced mathematical and statistics skills gained through a bachelor's degree or higher. In most positions, actuarial analysts must be certified with a professional association to prove their skills.
The actuarial business is growing in competitive industries that need a predictive edge from their competitors. For example, the health industry is growing in size and percentage of gross domestic product over the past 20 years. The growth has lead to more competition between the different health insurance companies that try to balance competitive rates with their risk exposure.
Actuarial analysts use advanced computer software programs to create statistical models comparing various data that predicts potential risk a company is exposed to. Predictive tables, probability tables and life expectancy tables are created via analysis software such as XLSTAT and Strata. Actuarial analysts may even create custom algorithms for the industry of their employer so as to factor in relevant additional data.
Beyond the predictive tables and statistics, actuarial analysts look to outside data on additional risk factors. For example, the likelihood of a catastrophic event such as a flood in a coastal town is an enormous cost for an insurance company. They must be prepared to know the likelihood of such an event so they can charge customers accordingly to adequately pay the insured for damages if needed. In health insurance, the likelihood of certain diseases in an area or family history are relevant to determining risk.
Analysis and Communication
The more data available, the better is a good strategy, but not all managers understand how to interpret or extrapolate the data available to them. Balancing all of these factors is key to avoid over or undervaluing a service. Actuarial analysts understand how to factor in various data to their models and communicate the results and possible risks clearly to their team.
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