Written by Dave Deacon

Actuaries look to add education, intelligence, and analysis into a crystal ball across several areas of application.  Many actuaries start their careers practicing in the insurance space with applications in life, health, property & casualty insurance, pensions, benefits, etc. While these specific applications vary greatly, the underlying commonality that actuaries help to shape is the analysis and evaluation of the underlying risks and uncertainties contained within their business.  Will a risk or loss occur? If it does, when will it occur?  How much of a loss will be realized?  These are all questions and uncertainties that no one truly has the answers to until an event has actually taken place.  The actuary’s role is to analyze the underlying risk in order to gain a better understanding of the nature, likelihood, and impact of that risk on the organization, individual, etc.

According to the Bureau of Labor Statistics with the U.S. Department of Labor’s “Occupational Outlook Handbook,” the actuarial field is projected to grow at a rate of 22% over the next decade. This illustrates the value put on the skill sets of actuaries in being able to bring their technical disciplines together to solve a business problem. A growing number of companies are building out their risk analytics functions to better plan and navigate for the challenges they face ahead. Actuaries will play a leading role in this, giving them bright and broad career path options.

As actuaries work in a broader range of industries, job functions, and roles, they bear an increasing burden within their respective organizations. One thing that I cannot stress enough is the value of being able to translate an actuary’s work into practical business solutions for others in their organization. Oftentimes, we as actuaries can engage in very developed and technical paths in our analysis with the hopeful conclusion of a suggested path forward to the business problem being reviewed. We, as actuaries, need to bear in mind that our organizations work with many other internal (and external) disciplines, all very well-versed in their respective areas but potentially not as knowledgeable in actuarial sciences.  It’s our responsibility as actuaries to not only do the diligence with the analysis and work but also to be able to make our work explainable to other business units so that acceptance of the actuary’s work comes with some degree of comfort in the recommendations.

For example, as we go further down the path of data modeling, the black box aspect of actuarial work only increases. More and more companies are enhancing, if not replacing, traditional actuarial methods for newer modeling techniques, sometimes through the aid of a third-party vendor.  These vendors can ring tremendous value to the business problem being analyzed by the actuary, but the actuary must serve as a bridge to other business units in their organization. Understanding and implementing the results of complex analytical work becomes more and more difficult for non-actuarial business units. We, as actuaries, play a large role in explaining the recommendation, solution, risk, etc., to our business partners to give our organizations the best opportunity to achieve success (however each business measures it).

As actuaries, we can often get very “in the weeds” with our analysis as our background is typically very detailed, math-based, and intellectual. Other disciplines in our organizations bring a different portfolio of skill sets with them.  Being the “hub of the wheel” rather than just a spoke is what actuarial science is truly about. I have not met an actuary who’s said they were a poor performer in mathematics in their studies. We all have strong mathematical backgrounds, where development as an actuary is most needed (and can be most challenging to some), which is developing the business acumen to understand how to relate their mathematical talents to practical business problems.

As actuaries start their careers, or even as current actuaries work in their respective roles, they need to take the time to understand and recognize the differences in skill sets and responsibilities across their organizations. Just as a sports team has different roles and responsibilities on the court, field, etc., so too do actuaries and other professionals. A team can’t be successful if each player doesn’t perform in their role, but a team can also not be successful if their players don’t work together and communicate well. As actuaries, we need to do our part as team players, work, and communicate with others constructively as we aim for success.

Being in the second half of my actuarial career after having practiced full-time in the actuarial field in a variety of roles for the past 27 years, I’ve come to learn that no risk or uncertainty is completely solvable. Intellectual curiosity can carry one a long way down the analytical path to be more informed about risk, but no amount of time or analysis will tell you with certainty what the outcome will be. Our responsibility as actuaries is to analyze that risk and be able to discuss it properly with other business units in our organization so that we’re all on the same path towards success.

About the Author:

                  Dave Deacon has been working in the insurance field in a variety of roles (pricing, product, reserving, modeling, and financial forecasting) for over 25 years on the carrier side with most of his focus being on property & casualty. Outside of work, he enjoys spending time with his wife and two children as well as watching all Boston sports teams, especially the Celtics!