If you like to solve problems, analyze data, and work in an ever-changing environment, then consider a career as an actuary.
To put it simply, actuaries assess the likelihood of uncertain future events (like an accident, a fire, or a death) and quantify the financial consequences of those events. Actuaries have a lot in common with data scientists. Both are professionals who are interested in analyzing data to solve current problems or to mitigate the downside risk of potential problems.
The Wisconsin School of Business spoke with Gordon Enderle, director of the Capstone Certificate Program in Actuarial Science, about the actuarial profession and its great career opportunities.
What do actuaries do?
Actuaries design models to assess the financial consequences of potential, uncertain future events. Actuaries use data analytic tools to understand what has happened, and then make informed predictions to guide their organizations about what might happen in the future.
Establishing car insurance rates provides a good example of one type of actuarial task. We know that there are going to be car accidents in the future, but we do not know when any given accident will occur, or how much it will cost to repair the damage related to that accident. Actuaries analyze historical car accident data to develop models to project the cost of future accidents. These models help actuaries set car insurance prices so insurance companies and drivers can be prepared financially in the event of an accident.
The role of the actuary is transforming with the expansion of data science, even though actuaries have been involved in data science and predictive analytics for decades. Data science involves analyzing large data sets using different analytical methods to come up with predictions. Actuaries often focus on situations with substantial uncertainty, which makes for particularly challenging prediction problems.
In what industries do actuaries work?
Insurance, consulting, and government are very large fields for actuaries. Actuaries work in other industries as well. You will find actuaries in rating agencies, banks, investment houses, and other financial institutions, though the number of actuaries in these industries is relatively small today.
Generally, actuaries apply their expertise in one of the following topical areas: life insurance, health insurance, employee benefits, investment, or property/casualty insurance.
How would you start if you wanted to become an actuary?
If you are a student, you can begin by taking courses in calculus, statistics/data science, and computer science. Usually, data are analyzed in statistics classes. You learn to program in computer science classes, although statistics courses are introducing programming in their classes too. You also want to take a class on probability.
If you have already graduated from college or are looking to change careers, a program like the Capstone Program in Actuarial Science at UW–Madison can be helpful. The Capstone program helps individuals get exposure to the math, statistics, and computer science that are necessary to begin an actuarial career.
Check out the website: www.beanactuary.org for more information about getting started.
What are some software packages for aspiring actuaries to learn at some point?
R and Python are two programming languages that are powerful for data analytics, predictive modeling, and machine learning applications. Many organizations in the business world have adopted such programming languages as well as the program SAS. R/Python are also prevalent across academia and are used in research. The UW–Madison actuarial science program uses R in its courses.
Do actuaries do things other than working with data?
Actuaries are trained in more than data, math, and statistics. Actuarial training includes accounting, finance, and various areas of business, such as law, marketing, and human resources. This broad knowledge allows actuaries to play many different roles within an organization although not all actuaries are experts in all these areas.
Actuaries fill a wide range of job types. Some jobs are very quantitative and others are not. An actuary in a consulting firm might spend a lot of time on client management and business development or on specific projects for their clients. An actuary in an insurance company might spend a lot of time on financial reporting or managing projects, as well as working with others throughout the organization.
The actuarial career is very flexible in terms of changing when one’s desires/needs change. We are not the same person 5 or 10 or 20 years out of college. What we may want in a career changes as our life changes and our roles within the actuarial field can change.
How important is diversity in the actuarial profession?
Employers, as well as actuarial professional organizations, promote actuarial science as a career choice for interested and qualified candidates of all backgrounds.
Many organizations have a strategic plan to increase the number of Black and Latino credentialed actuaries to diversify the perspectives of organizations’ thought leaders. The International Association of Black Actuaries (IABA) and the Organization of Latino Actuaries (OLA) support the success of people of color in actuarial careers.
At UW–Madison, we are seeking ways of increasing the diversity of our actuarial program through partnering with other organizations and holding classes that can help students succeed in their career goals.
Do students get a chance to work with companies in the actuarial programs at UW–Madison?
The actuarial science program at UW–Madison has strong relationships with many employers. We have a Cocurricular Learning Board that meets with students regularly to talk about industry issues and provides mentoring to our students. Plus, our actuarial club organizes employer presentations throughout the year where students can interact with employers and learn about hot topics in the industry. With these events, as well as internships, students learn what kind of work and which area of practice they might want to pursue once they leave school.
Having access to the industry and our large alumni network is a huge benefit for our students. They get to know leaders at major companies, apply their knowledge to industry-specific projects, and gain an understanding of which direction in the actuarial science space they want to start their career.
In addition, we hold a career fair each year that is specifically for actuaries. We usually have 60 or more employers recruiting our students at the fair.