Business in the world today is, more than ever before, fraught with uncertainty and pressure. The need for a business to perform competitively, and yet respect the interests of its customers and the economy in which it operates, posses some special problems. Actuarial Science is a way of tackling the operational issues which financial business face, particularly where there are significant financial uncertainties in running the business.
Actuarial Science is a fairly unique blend of mathematics, economics, and real world business understanding, all designed to give an understanding of sound practical ways in which financial risk can be managed.The prototype examples of where auctarial science would be particularly relevant are in the running of insurance companies and pension funds. In return for investing people's money, a promise has been made to pay out some benefits in the future.
Actuarial science is needed to deal with the uncertainty of how much will need to be paid (amount) and when (timing). The amount and timing variables can be modelled mathematically to produce a workable model of the monetary liability today. The statistical distributions and methods will vary widely depending on the nature of the liability - modelling car accidents, latest industrial disease claims, and how long someone will need a pension to be paid for all different, and also carry varying economic cost.
The mathematicians and economists can, of course, postulate all sorts of models and approaches here, but it is the actuary who will need to choose the specific methods and data to use, so as to be able to stand by the results and accept the real-life consequences of them being wrong. So the actuary is very much a person of judgement rather than one who simply applies technique. Correspondingly, they will usually have a responsible, senior, and well-respected position in an organisation.
Newer examples of applying actuarial science are in the assessment of capital projects and in helping a broad range of large financial organisations to better understand their liabilities and cater for them. If one reads the amounts of a bank or diversified retailer, these days there are a surprising number of complex assets held to protect and stabilise the company's finances!
Study routes will tend to begin with a thorough grounding of the mathematical and economic techniques which make up the foundations of actuarial science - including, for example, statistical modelling, and the possible types of investment. By the end of this stage, a very good knowledge of business and finance will have been built up as well.
The deeper understanding of applying the techniques and developed by looking in more detail at subjects in investment, insurance companies, and pension funds. Many, except the later ones, may be exempted for goods results in appropriate university-approved actuarial science courses.
Students in the UK are able to choose from a variety of options when studying actuarial science. One route is to be sponsored by an employer and study by correspondence through the set of professional exams, typically having around two half-days a week of study leave.
An increasingly popular option is to make a three-year actuarial science degree course that exempts from many of the earlier exam subjects, before joining an employer to complete the remaining exams. A recent innovation has been to allow accredited universities to offer postgraduate courses for exemption from most of the later exams as well.
Because of the responsibilities which actuaries are called upon to undertake, the relevant UK professional body (the Faculty of Actuaries for Scotland and the Institute of Actuaries for England and Wales) requires prospective actuaries to pass at least a final exam directly.
All of this specialist training and development of judgement does take time (typically four to six years to qualify as an actuary, with a continued need to develop and maintain skills thereafter), but is a valuable investment for a student to make. A successful study of actuarial science should produce an analytic, business-aware individual who would be equipped to fulfil a range of senior roles in finance. By carrying on to complete the professional exams to become an actuary, a reward of a responsible job and high salary should follow as a reward for the commitment you will have made!
Quite apart from its language and culture, the UK has lots of appeal, both in terms of study options and employment opportunities for actuaries. Increasing use is being made of universities to deliver high-quality courses with exemptions from a growing number of the professional exam. The exam syllabus it self is undergoing a major review to endure its international appeal and appropriateness in the new millennium.
UK employers of actuaries have many full-time opportunities for both trainee and qualified actuaries, with competitive remuneration packages. In the UK, newly qualified actuaries would be expected to earn somewhere between £30,000 and £50,000 per year. Many successful actuaries earn over £100,000 a year. The way in which UK financial institutions are regulated places much responsibility on actuaries to ensure the sound running of them. Compared with some other countries where rigid rules are prescribed, the UK actuary therefore has plenty of opportunity to exercise intellect and judgement.
The UK economy relies heavily on financial services as safeguarding the financial interests of its population, as well as being a provider of vast invisible earnings. As such, there are opportunities for trainee and qualified actuaries to work on behalf of government, either in a regulatory capacity or to devise and monitor social security provision. Overseas students will find that the UK presents an excellent opportunity to hone their English Language skills, and that there is also the chance of working London - still the foremost financial centre, particularly for insurance transactions. There is also a favourable approach to the gaining of work permits, as actuarial work is an in-demand specialist activity.
The UK actuarial Profession is itself fairly small (around 5,000 qualified and a similar number in training), which offers both as badge of exclusivity and a working environment where support for mutual development is never far away.
