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Thecommonly-asked questions about actuarial science and actuary,especially for Malaysian but suitable for every countries with somemodifications.
What are actuarial science and actuary? Are they the same things? According to Wikipedia, Actuarial scienceis the discipline that applies mathematical and statistical methods toassess risk in the insurance and finance industries. An actuary is a business professionalwho deals with the financial impact of risk and uncertainty. Actuarieshave a deep understanding of financial security systems, their reasonsfor being, their complexity, their mathematics, and the way they work.To be more details, Actuary’s main industry is insurance. They are riskmanagers, they try to maintain the solvency of the company by managingthe risk effectively. In a nutshell, the work that an actuary does ininsurance can be divided into two – Pricing and Valuation. In Pricing,actuaries have to price insurance products so that the company will make a profit.This is not as easy as it sounds because the way insurance works, thecompany only suffers a loss in the future, and it is up to an actuaryto price the product in a way that it is improbable for the company togo bankrupt anytime in the future. That is why we have projections and forecasts. In Valuation, actuaries need to take the premiums that people pay to invest in the best possible assets. This is necessary for the company to make a profit, because many products only allow to break-even, and it is up to the actuary to find the most valuable financial assets to investin. There are consultant and contractor actuaries as well. They movefrom company to company advising insurance companies on how best toprice their products, how they value their products, how they meetregulation, etc… They are one of the most well-paid people in thefield. An actuary can become Chief Financial Officer(CFO) and eventually CEO of a company. The fact is that insurancecompanies need us. We are the experts when it comes to the financialmatters of an insurance firm.
I want to do Actuarial Science because I like Math? You can be a genius in mathematics but not must in actuarial science. Actuarial scienceis NOT ALL about mathematics, but involving lots of statistics,modelling, finance, economics, accounting and so on. So, even when youdon’t end up as an actuary, you will still have other career optionssuch as working in risk management, investment, etc. “I want to do Actuarial Science because I like Math” is the biggest misconception that people have about Actuarial Science.In actual fact, a good knowledge of Mathematics is necessary, but agreat knowledge is not. In the UK, the first 8 professional papers aresomewhat Maths-based, but the tougher papers at the end are all writtenpapers, which require a good command of English, a good knowledge ofthe insurance industry and good critical thinking skills. When you do start working, you will realise that the only Math you need are mostly addition and subtraction. Computer Programmingwill be the most important skill you will ever need. Hence, if you lovemathematics, you will love pure mathematics, do a Mathematics degree.
I want to do Actuarial Science because the pay is good? Actuarial scienceDOES NOT guarantee a HIGHLY paid job. Only qualified Actuary get paidin millions depend on the need in different countries. Freshactuarial science graduate does not make you different from any other graduates at all. It’s easy to get a bachelor’s degree in actuarial science. But it’s not easy to be an actuary. Undoubtedly, the route becomingan actuary is a very tough. If not, millions of people will becomeactuaries and the job prospect for actuaries will be really bad. True,we have one of the highest starting salaries in the business world. Notby much though. The thing is, a qualified actuary does earn a lot. Butto get that qualification, one has to pass professional papers, andthose are not easy by a mile. The average time it takes to pass allyour papers in Malaysia is around 6 years, depending on how good youare. (Some do take more than 10 years) And truth be told, all otherprofessions will be able to earn a satisfactory remuneration within 10years. If you want the money, go into Investment Banking. In a magazinewhich I have read, in business, while all other financial workers arepaying off their mortgage fortheir first house, Investment Bankers are buying their second home. Myadvice is thinking thrice before you make a decision to get into theprogram, don’t jump into it for the wrong reason, i.e. money. I knowthat some actuarial majors brag about actuaries getting paid millions.Yes, it is true but take note that you only get paid well if you’regood in term of many things, such as soft skills. And, there are MANYMalaysians currently studyingactuarial science. (JPA scholars, Bank Negara scholars, SC scholars, Khazanah scholars, UKM, UM, UiTM, USIM, UTAR, INTI, Taylor, HELP…)
Will update more later :)
Source: FAQ of Actuarial Science and Actuary, Malaysia
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