Actuaries. Professionals who thought accountancy was too daring
Years ago, you would sometimes hear ‘jokes’ to the effect that the people who became actuaries were those who thought accountancy was too daring. Having worked with and alongside accountants for these last 20 years I now understand just how daring accountants can be – about the same as actuaries is the answer! I’m an actuary and proud to be one.
While accountancy is essentially dealing with known, or past numbers, actuarial work deals with predicting the future – specifically the probability and the financial impacts of events that may occur. If you can work out firstly how likely an event is to happen, and secondly its financial cost, that goes a long way to preparing a plan of action to deal with it.
Insurers are well known to base underwriting around actuarial predictions with models becoming increasingly sophisticated as they factor in bigger and better data.
Given that data is the key to all such work, it is not surprising that the explosion of data analytics in recent years has seen actuaries moving beyond the traditional home of insurance and super to a whole range of industries, where risks and uncertain outcomes need to be managed. Just as a taster, actuaries advise on issues such as the resolution of injury claims, the modelling of out of home care and social housing and help corporates in every sector, including not-for-profit entities.
Actuaries are embracing the growing opportunities to work alongside other professionals across a breadth of professions, including data, and legal – not just our daring accountants.
Risk management is one of those significant area of growth for actuaries. This is accelerating with the advent of COVID-19 as the private and government sectors, the economy and jobs market all seek to recover from the impacts of the pandemic. Risk management involves skills such as business modelling, valuation of obligations and product pricing, risk analysis, and statistical analysis and interpretation. Yes, it does help to be good at maths if you want to be an actuary.
In 2019, John Lonsdale, Deputy Chair of APRA, when introducing an important new industry on actuarial matters, called on actuaries to “have the courage to speak up” to help CEOs prudently manage risk, both on financial and non-financial risks. He knew that we have a crucial role to play in identifying these issues and should call boards out if they are not addressed properly. This need has only grown since the advent of COVID-19 and its impact on so many companies.
Our focus goes wider than individual businesses. In the year ahead, actuaries will continue work on intergenerational equity and the Australian Actuaries Climate Index, and new work on the aged care sector.
Many actuaries go on to develop broader roles, starting businesses, non-executive positions, COO, CFO and CEO roles to name but a few. I celebrate them all as real actuaries. Both for businesses and wider society we have an increasingly important role to play.
Jefferson Gibbs is the new president of the Actuaries Institute taking over from Hoa Bui, formerly a fellow partner of this firm.