Actuarial science is a formal mathematical discipline that uses primarily statistics to determine risk. Risk is important in long term financial industries such as insurance and pensions. In these areas, money is set aside for so long that any number of things could happen to it. Actuaries use a variety of mathematical and technological tools to evaluate and reduce this risk to optimize the outcome. In this category of Direct Knowledge, you'll actuarial science articles about the science itself as well as information about careers, links to additional resources, and more.
History of Actuarial Science
Because actuaries work in the financial industry with a heavy focus on insurance, the history of insurance and the history of actuarial science are intertwined. The actuarial science articles here will shed light on this relationship through time, from the far past to current events.
Interest was born
Starting from the beginning, insurance in some form or another has been around since ancient times. In those days, large shipments of cargo going long distances needed funding from outside sources. The cargo was just too valuable for the sailors to risk losing it all on the way to its destination. Wealthier individuals saw that the trade was worth the risk, and decided to fund the journey while promising not to seek repayment if the cargo was lost. The catch was that if the cargo was successfully traded, then the traders had to refund the investors their money. But in addition to the original funding, they also has to pay a little extra as a thank you. Thus, interest was born.
By the 1300s, professionals took over this role of investing in risk, aka insuring. Types of insurance expanded to include not only marine trading, but also pensions. Pensions provide money once someone has stopped working, preventing someone's savings from running out. Both the marine and pension insurance demonstrate two important concepts that formed the root of actuarial science; the idea of payment upon the loss of something valuable (ship cargo, savings, even life) and the idea of payment to prevent loss (running out of savings). To determine the amount of money necessary for these situations, actuaries need to determine the risk of loss.
Tools for Calculating Risk
In the 1600's mathematical advances started picking up, allowing for better prediction methods in actuarial science. Collecting and analyzing data of past deaths meant actuaries could make predictions about time of death in clients. Later on, in the 18th and 19th centuries, the complex calculations were simplified using commutation functions. The actuarial science articles in this category also go over the organizations that popped up to support actuaries as well as the public interest by ensuring a set of high standards.
During the 20th century, advancements in the processes for calculations led to improved methods of computation that took less time. The introduction of computers only added to this, leading the way to fast and advanced computation with high accuracy. This relationship might make reading computer science and math articles a useful supplement to actuarial science articles.
Main Applications of Actuarial Science
If you're just starting to look into the field, you might be wondering what makes it so important in terms of modern society. The actuarial science articles in this category not only define the subject, but also give you a clear picture of its importance as a profession. Through these articles, you can learn the place it holds in society, and how you might become a part of it.
While marine insurance and pensions were the original actuarial fields, many others have emerged over time. Actuary science also plays significant roles in health, property, and casualty insurance, as well as asset management and financial investment. In the area of pensions, actuaries compare different strategies for saving and extending the life of saved money. They compare design, maintenance, funding and accounting of different plans with regard to short- and long-term factors.
In life insurance, actuaries typically focus on mortality, using tables and calculations to estimate likely time of death. These days, life insurance also often includes insurance on credit and mortgages, as well as businesses and health savings accounts. Health insurance, on the other hand, looks at a number of contingencies such as disability, fertility, and morbidity in addition to mortality. Things that the consumer does that affect their health and safety are, understandably, of high importance in this area.
Risk Management and Investment
In general financial asset investment and management, actuaries look at the risk of certain market events and changes. They aim to maximize the gains made on initial investment, and also minimize losses. Overall, there are dozens of sub-fields within actuarial science. There are also fields that aren't considered actuarial science, but play a big role in the field. Probability theory, risk modeling, big data, statistics, and economics are all very relevant in the field. The actuarial science articles within this category further explore these areas and others to give you an idea of the scope of the subject.
Education and Careers
While actuaries can work in a variety of fields, as shown above, most work in insurance. In any case, most of the jobs will be fairly similar, taking place in an office setting with full time hours. Being an actuary consistently makes the top of the list in rankings for best jobs. This is due to its consistency, demand, and high pay. The median salary according to the Bureau of Labor Statistics is over 100,000 dollars per year, and the demand for actuaries means growth of the field is quite fast.
To start a career in actuarial science, a bachelor's degree is essential. There are also a number of exams necessary for an actuary to gain professional credentials. Seven, to be exact, or ten for certain certifications. Which one you do depends on which type of actuary you want to become. For more information on exams, or perhaps preparing for them with some quality journals and magazines, check out the actuarial science articles articles in this category. You just might find the boost you needed for your actuarial science class, or even the profession you've been searching for.
Actuarial Science Books
Actuarial science is an interesting and unique field that requires analyzing risk; or in other words, exploring the unknown. How does one predict what might happen in the future? What should the reaction to any particular unexpected change be? What improvements can be made now to prevent or adapt to changes later on? Explore the answers to these questions and more through the actuarial science books available in this category of Direct Knowledge.
Books on Actuarial Science and Risk
Risk is something that humans have had to deal with since the dawn of time. Is hunting that buffalo worth the risk that it could hurt the hunters? Could sailing to the Americas be worth the risk of getting lost at sea? Is investing in Bitcoin worth the risk of the unstable market? As our risks have changed over time, so has our ability to assess and prepare for them. Actuarial science does just that, mainly in areas where money plays a large role.
One example of the many modern changes to the field is the use of computers and programming. Algorithms and programs do a large amount of work for us now, so it's important for actuaries to have a strong skill set in the area. Thus, actuarial science books like Linear Regression Using R can give you a leg up. This book teaches fundamentals of the programming language R and how to use it with large quantities of data. Many languages and techniques are useful for actuaries, so you may even want to take a look at the programming books available through Direct Knowledge.
Insurance and finance
As you can see, actuarial science relates to a number of subjects. Becoming skilled in the field means learning about math, statistics, probability, economics, and even computer science. The actuarial science books in this category show you how these topics relate to one another and to actuarial science. At first, it might be best to keep the subjects fairly isolated. Start with understanding them one by one, and then move on to the more complex relations between them. After mastering the basics, look into specific fields and specialties.
Insurance and finance in particular hold actuarial science in high regard since such large amounts of money are at play. In insurance and healthcare, companies face the risk of needing to pay for costly accidents or health problems. In these areas, actuarial science applies to everything from property to people. And often times these large sums face large risks due to the long amount of time they sit around and changes that can happen in that time.
The importance of the field in real life
For example, pension plans are so long-term that actuaries try to figure out the best course of action while taking into account how certain factors can change. Bond rates, employer competitors, workforce demographics, changes in revenue code; these short- and long-term trends all affect how pensions plans end up over time. In finance, on the other hand, changes in the economy or the successes and failures of a business itself are the risks actuarial science looks at.
Actuarial science books that focus on the importance of the field in real life are important for seeing the bigger picture. Risk Management for Enterprises and Individuals does this by guiding readers through various scenarios in which risk is an important factor. It uses real events such as the 2008 financial crisis to show the effects that risky decisions can have. These kinds of actuarial science books are great for getting a feel for the applications of the field or even for creating engaging course content as an educator.
Get Prepared with These Actuarial Science Books!
Having such a strong grasp on each part of the field is important because actuaries must pass tough exams to become professionals. And the standards have only risen more and more over time, especially with the rise of computers and high-level computation. So, stay up to date and prepared for exams by looking into the actuarial science books in this category. The entire selection is just a click away for anyone around the world.