Much of life is uncertain. It involves risks, such as sickness, disability, job loss, property damage or loss, or unforeseen death. No one can predict the chance of these risks for any one individual. However, actuaries use their specialized knowledge of finance, statistics, and risk theory to calculate probabilities. For example, they may measure the likelihood of certain events occurring in the future within defined groups. With that information, they can help design programs to mitigate (reduce damage from) risks.
In insurance companies, actuaries take part in almost every aspect of the business. This includes:
- Developing new products and services
- Setting premiums
- Monitoring profitability
- Valuating appropriate reserve levels
- Performing management and administrative tasks
In other settings, actuaries provide a wide variety of services. For example, they may:
- Help employers, labour unions, and trustees design, fund, and administer private pension plans and other employee benefits
- Specialize in probabilities of loss arising from sickness or disability, or damages caused by fire, theft, windstorm, or accidents
- Appear as expert witnesses in court proceedings on issues such as lost future earnings
- Help sponsors of benefit plans to optimize their investment returns based on the nature of the liabilities and the organization’s risk tolerance
- Improve medical insurance plans by showing how preventive treatments or new drugs may create long-term savings
- Advise companies on how to set up trust funds to cover anticipated expenses
