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Actuary

Actuary

Level 7 - Professional Occupation

Analysing data to predict the likelihood and potential financial risk of future events

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Summary

This occupation is found in the public and private sectors. In the private sector, an actuary may work in insurance companies, such as life, health, or general insurance. They may work in financial consultancies, pensions, healthcare, investment, and the growing area of financial risk management. In the public sector, they are most often found in the Government Actuary Department (GAD), where they help the government plan and make decisions.

The broad purpose of the occupation is to use mathematical skills to measure the probability and risk of future events. An actuary also measures the financial impact on a business or individuals. Actuaries are both problem solvers and strategic thinkers, with a deep understanding of financial systems.

In their daily work, an actuary works as part of a team to analyse data. They build mathematical models to evaluate financial risks and communicate the results to non-specialists.

Insurance company actuaries typically work in areas such as pricing and product development, reserving, capital modelling, and risk management. Work for insurance consultancy firms may cover similar areas but tends to be more varied on a day-to-day basis.

Pensions consultants may advise private and public pension providers and trustees on key matters, including the funding levels of their pension schemes and the contributions required to meet future pensions. They may also help clients understand and manage the risks they face.

An increasing number of actuaries work in less typical fields, such as banking, investment management, corporate finance, or any area where financial modelling is deemed useful. Some actuaries work to quantify the risks of climate change and other environmental factors.

Actuaries are required to act in the public interest and must therefore maintain the highest standards of professional conduct and competency. They uphold professional standards of ethical behaviour and integrity at all times.

Typical job titles include:

Actuary
Capital actuary
Financial actuary
Insurance actuary
Investment actuary
Pensions actuary
Pricing actuary
Reserving actuary
Risk actuary
Climate actuaryeco
Climate change actuaryeco
Environmental, social, and governance actuaryeco
Sustainability actuaryeco

Keywords:

Actuary
Data Analysis
Finance
Mathematical Skills
Statistics

Knowledge, skills and behaviours (KSBs)

K1: Principles of time preference theory of interest and the time value of money, including standard actuarial compound interest rate functions.
K2: Principles of equation of value to evaluate financial problems in particular relating to loan schedules, bond prices, bond yields, and project appraisals.
K3: How to model uncertain future cashflows which may be contingent on mortality, morbidity, or survival.
K4: The future loss random variable and its application to the calculation of premiums and reserves for conventional life assurance and annuity contracts.
K5: Rational economic theory, including utility theory.
K6: The use of models in portfolio selection and asset pricing, including the term structure of interest rates and credit risk.
K7: The use of models in insurance to calculate the probability of ruin and estimate claims.
K8: The construction and evaluation of common forward and option contracts, as well as theoretical models for derivatives and option pricing, in particular the theory and application of binomial and Black-Scholes models.
K9: Basic properties and uses of commonly used probability distributions, and the statistical properties of data generated by randomly sampling from a known distribution.
K10: The use of statistics to make inferences about the process underlying a data set.
K11: Regression theory and its applications, including generalised linear models.
K12: The fundamental concepts of Bayesian statistics.
K13: Statistical distributions suitable for modelling the variables and risks that arise in insurance contracts.
K14: Time series analysis methods and stochastic processes, including Markov chains and Markov jump processes.
K15: Description, estimation, and use of statistical survival models for the time until an event occurs.
K16: Elementary principles of machine learning.
K17: Corporate governance and regulation, including the different objectives and stakeholders that companies may seek to satisfy.
K18: Different types of corporations, how they are structured and financed, and factors which should be considered when deciding on their structure.
K19: The construction and interpretation of company accounts.
K20: Economic concepts and models, their use in business, and recent economic and financial history.
K21: Microeconomics, including models of consumer choice and the theory of the firm, and how these affect business decisions under different conditions.
K22: Macroeconomics, including aggregate economic variables and concepts that relate them to government policy, business decision-making, and financial market variables.
K23: The business environment in which they will work and the wider actuarial landscape.
K24: Approaches to tackling business-related problems, including strategic thinking, business decision-making, and the evaluation of investment projects in a corporate setting.
K25: The basic legal principles relevant to actuarial work and their practical implications.
K26: Approaches to applying underlying actuarial principles to a range of problems and issues in commercial and business environments.
K27: Approaches to identifying, classifying, measuring, and managing risk in a range of commercial situations, including the use of the Actuarial Control Cycle for risk management.
K28: Approaches to the application of mathematical and statistical techniques to a range of problems and issues in commercial and business environments.
K29: Approaches to the application of business finance and economics concepts to a range of problems and issues in commercial and business environments, including the valuation of liabilities.
K30: Problem-solving in financial services, focusing on problems and issues in financial services, with application to wider domains and industries.
K31: The principal terms used in financial services, investments, asset management, and risk management.
K32: The various external forces on an organisation and their impact, including climate change and other environmental issues.
K33: The role of professional and ethical standards in an actuary's work.
K34: The role of peer review in professional work.

S1: Apply actuarial principles to real-world examples of interest rates, discounting, and evaluation of present values of cash flows.
S2: Apply the principles of the equation of value to evaluate financial problems, particularly relating to loan schedules, bond prices, bond yields, and project appraisals.
S3: Project cash flows to profit-test life insurance contracts, and apply projected cash flow techniques to pricing and reserving.
S4: Apply a range of financial risk measurement tools to evaluate investment opportunities in the context of utility functions.
S5: Apply actuarial modelling to real data sets using Excel.
S6: Apply mathematical and statistical methods to real data sets using R programming.
S7: Produce simple visualisations and statistics from a data set.
S8: Interpret company accounts.
S9: Apply the Actuarial Control Cycle for an organisation.
S10: Apply the critical steps to check and model data, and analyse the actuarial methods used and the outputs generated.
S11: Document actuarial work, and create and maintain an audit trail.
S12: Communicate to stakeholders, such as colleagues, the approach, results, and conclusions of actuarial modelling.
S13: Provide written communications of a technical nature to a non-technical audience, using effective structure, appropriate language, clear explanations, and incorporating effective communication tools.
S14: Identify relevant information and appropriate content to ensure a communication meets its objectives.
S15: Present the results of actuarial work to informed but non-technical audiences.
S16: Analyse and prioritise stakeholder needs when designing actuarial solutions.
S17: Apply the concepts of professionalism, awareness of the Actuaries’ Code, and business ethics to a range of different situations.

B1: Takes responsibility for personal and professional development, and meets the Associate-level Personal and Professional Development requirements of the Institute and Faculty of Actuaries.
B2: Acts honestly and with integrity.
B3: Carries out work competently and with care.
B4: Remains impartial, ensures that professional judgement is not compromised, and cannot reasonably be seen to be compromised by bias, conflict of interest, or the undue influence of others.
B5: Complies with all relevant legal, regulatory, and professional requirements.
B6: Acts ethically, speaking up if they believe, or have reasonable cause to believe, that a course of action is unethical or unlawful.
B7: Works collaboratively with others.

Duties

Duty D1

Take on actuarial work from stakeholders, gather an understanding of their needs, and explain the risks and benefits of the options available and next steps.

Duty D2

Review and analyse documents and data to identify key facts and evidence, and form judgements on the quality of evidence and any gaps or contradictions.

Duty D3

Perform actuarial calculations and build computer models using actuarial techniques.

Duty D4

Apply actuarial techniques to solve problems.

Duty D5

Prepare reports and other communications, including presenting visualisations of data and solutions to clients, colleagues, managers, and or stakeholders.

Duty D6

Determine potential risks, measure the probability and the financial impact on stakeholders, and explore ways to reduce them.

Duty D7

Monitor and develop processes and digital systems to ensure they are efficient and compliant with all relevant legal, regulatory, and professional requirements.

Duty D8

Build and maintain professional relationships with colleagues and clients to enable delivery of actuarial tasks and objectives.

Duty D9

Provide ethical professional actuarial advice to clients appropriate to their circumstances and objectives in compliance with the Actuaries Code.

Duty D10

Maintain professional standards by undertaking continuous professional development activities and keeping abreast of developments in the wider actuarial landscape.

Occupational Progression

This occupational progression map shows technical occupations that have transferable knowledge and skills.

In this map, the focused occupation is highlighted in yellow. The arrows indicate where transferable knowledge and skills exist between two occupations. This map shows some of the strongest progression links between the focused occupation and other occupations.

It is anticipated that individuals would be required to undertake further learning or training to progress to and from occupations. To find out more about an occupation featured in the progression map, including the learning options available, click the occupation.

Progression decisions have been reached by comparing the knowledge and skills statements between occupational standards, combined with individualised learner movement data.

Technical Occupations

Levels 2-3

Higher Technical Occupations

Levels 4-5

Professional Occupations

Levels 6-7

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