Actuarial analysis
Actuarial Analysis
Actuarial analysis (/ækˌtʃuːˈɛərɪəl əˈnælɪsɪs/) is a discipline that applies statistical and mathematical methods to assess risk in insurance, finance, and other industries and professions.
Etymology
The term "actuarial" is derived from the Latin word "actuarius", meaning a clerk or accountant. The term "analysis" comes from the Greek word "analusis", meaning a breaking up or untying.
Definition
Actuarial analysis is a process used by insurance companies and pension plans to assess the financial implications of risk. Actuaries use statistical models to predict future events and their potential financial impact. These predictions are used to set insurance premiums, determine pension contributions, and make other financial decisions.
Related Terms
- Actuary: A professional who performs actuarial analysis. Actuaries are highly skilled in mathematics, statistics, and financial theory.
- Risk Assessment: The process of identifying and evaluating potential risks. This is a key component of actuarial analysis.
- Insurance Premium: The amount of money an individual or business pays for an insurance policy. Actuarial analysis is used to determine the premium.
- Pension Plan: A type of retirement plan where an employer and/or employee contribute to a fund to provide the employee with a guaranteed income upon retirement. Actuarial analysis is used to determine the required contributions and potential payouts.
- Statistical Model: A mathematical representation of real-world events. Actuaries use statistical models to predict future events and their potential financial impact.
External links
- Medical encyclopedia article on Actuarial analysis
- Wikipedia's article - Actuarial analysis
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