If you run a business, your company has undoubtedly managed numerous risks on a regular basis. These risks may have been anticipated or may have come as a surprise, but they have likely had an impact on your organization in some way.
There is a specialized team of professionals dedicated to analyzing risk and helping you ensure that such risk does not cause any serious negative effect on your operations. Those professionals are known as actuaries.
But what do actuaries do? In this article, you will gain insight into what their role is and the specific ways they can assist your business in mitigating risk.
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What is an actuary?
An actuary is a professional who applies mathematical and statistical methods to evaluate and manage financial risk. Actuaries use their knowledge of mathematics, statistics, economics and finance to analyze data and provide insights to businesses on managing risk that is faced by an organization.
Actuarial professionals play an essential role in the insurance industry, but their expertise can also be extremely valuable to other industries, such as healthcare, finance, and government.
What do actuaries do?
The role of an actuary involves assessing the probability of an event occurring, such as death, illness, natural disasters, or financial loss. They use this information to help businesses manage the risk inherent within their organization, make financial decisions, and develop strategies for long-term success.
Actuaries also influence the design of insurance policies, develop premium ratings, and determine the reserves needed to cover future loss obligations.
Why hire an actuary?
Businesses need actuaries for two main reasons: financial safety and improved control.
Financial safety
An actuary’s expertise in risk assessment and management helps businesses avoid financial losses and maintain financial stability. They can help businesses determine the likelihood of unexpected events occurring and develop strategies to mitigate their impact.
Improved control
Actuaries provide businesses with valuable insights and analysis that help improve decision-making and control. They can help businesses identify and understand the risks associated with different financial decisions, such as mergers and acquisitions, investments, and product development.
By providing detailed analysis and recommendations, actuaries help businesses make more informed decisions and maintain greater control over their finances.
How actuaries can help in specific business areas
If you’re in the business of insurance, reinsurance, or self-insurance, actuaries can help in a variety of ways. Some of the most common areas where actuaries are involved include:
Ratemaking
Actuaries help set rates for insurance policies and other products. This involves analyzing data to determine the likelihood of certain events occurring and setting rates that reflect the level of risk involved.
Planning reserves
Actuaries can help insurers plan for future financial obligations, such as claims and other liabilities. By analyzing data and projecting future trends, actuaries can help businesses determine how much money they need to set aside to cover these obligations.
Enterprise risk management
Actuaries can help businesses develop strategies for managing risk across an entire organization (and this doesn’t apply just to insurance companies).
This involves identifying potential risks and developing strategies to mitigate those risks – ultimately helping businesses make more informed decisions about investments, product development, and other financial decisions.
Looking for a professional actuary?
If you are looking for an actuary to help your business manage risk and improve financial control, consider reaching out to Axxima, a professional actuarial firm specializing in helping businesses determine and mitigate their risk.
With expertise in risk assessment and management, Axxima can help your business avoid financial losses, maintain financial stability, and make informed financial decisions by properly analyzing the risk your business faces.
You can learn more about Axxima here.
