Image 13Damage from
Hurricane Katrina in 2005. Actuaries need to estimate long-term levels of such damage in order to accurately price property insurance, set appropriate
reserves, and design appropriate
reinsurance and capital management strategies.
An
actuary is a professional with advanced mathematical skills who deals with the measurement and management of
risk and uncertainty. These risks can affect both sides of the
balance sheet and require
asset management,
liability management, and valuation skills. Actuaries provide assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms. The name of the corresponding academic discipline is
actuarial science.
While the concept of insurance dates to antiquity, the concepts needed to scientifically measure and mitigate risks have their origins in the 17th century studies of probability and annuities. Actuaries of the 21st century require analytical skills, business knowledge, and an understanding of human behavior and information systems to design programs that manage risk, by determining if the implementation of strategies proposed for mitigating potential risks, does not exceed the expected cost of those risks actualized. The
steps needed to become an actuary, including education and licensing, are specific to a given country, with various additional requirements applied by regional administrative units; however, almost all processes impart universal principles of risk assessment, statistical analysis, and risk mitigation, involving rigorously structured training and examination schedules, taking many years to complete. (
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