What is an Actuary?
As per Gemini: "An actuary is a professional who uses math and statistics to measure and manage risk and uncertainty. They use their skills to predict the financial impact of future events on businesses and clients."
EXAMSACTUARIAL CONSULTING
As per Gemini: "An actuary is a professional who uses math and statistics to measure and manage risk and uncertainty. They use their skills to predict the financial impact of future events on businesses and clients." - but what does this actually mean in practice?
An example / analogy
Say you are starting a new restaurant in order to make a profit. There are a number of costs you need to consider: rent, salaries, ingredients, bills, marketing. You also need to consider income and factors generating income such as: number of people eating at your restaurant, what people typically spend each visit, seasonal variation i.e., your restaurant might be more popular in December.
You might be thinking that this is all quite straightforward. You can just ask any accountant or analyst to calculate the cash flows and predict whether you will make a profit or not. However, if it was that easy we would all open a restaurant.
Usually you will have to ask yourself some tricky questions like:
Do you have competing restaurants and what would be the effect on profits if there was a new restaurant opening next to yours?
What happens if there is a fire and you have to close the restaurant for a short period, how will this affect income? Do we need to buy insurance?
Will there be many days will you be short staffed and unable to open fully? How does this affect profits?
These questions make it almost impossible to predict the success of the restaurant accurately. These difficult questions are the sort of questions that actuaries deal with. Actuaries will try to identify all these possible risks and put these risks into a percentage chance of it happening by using mathematical models. By doing this you can begin to come up with a number or a range of numbers for "predicted profits of the restaurant".
In reality
Actuaries are generally not working for restaurants but may work with consultancy firms to do something similar. However, the majority of actuaries will work in the insurance industry. This is because trying to predict future insurance claims is very important in order to project profits for the insurer.