When you think about finance, you probably think about the stock market, banks or C-suite executives. However, there is a large part of the sector, particularly in the realm of...
Actuarial Science Articles
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.
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.
The book Strength in Numbers: An In-Depth Look at Actuarial Science for Math Enthusiasts by Chloe Hung, lays out the steps from being a math enthusiast to working as an...
The history of actuarial science has its roots in ancient times, when insurance was used to manage shipping risk. Today, actuarial science encompasses many fields such as probability theory, finance,...
A list of about 60 actuarial science journals that actuaries may be interested in. These journals can be classified as either actuarial, insurance, or finance journals. Most of these journals are peer-reviewed...
Here is a comprehensive list of actuarial societies and organizations. Actuaries are remarkable professionals who generate solutions for complex financial issues. They regularly communicate their work to coworkers who are...
Actuarial science is concerned with risk analysis and evaluation of possible risk mitigation strategies to cushion business from the risk associated with uncertainties in life. Actuarial science knowledge is useful...
Actuarial science provides a way to assess risk in finance, insurance, and other areas of business and commerce through statistical analysis. While actuarial science has not changed drastically over the...
Actuarial science is the field of study that applies statistical and mathematical methods to analyze the risk in finance, insurance, and other professions and industries. Actuarial science utilizes probability and...