Actuarial science

Actuarial Science

Actuarial Science (pronunciation: ak-choo-air-ee-al sigh-ens) is a discipline that applies mathematical and statistical 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 "science" comes from the Latin word "scientia", meaning knowledge.

Related Terms

• Risk Management: The process of identifying, assessing, and controlling threats to an organization's capital and earnings.
• Statistics: The practice or science of collecting and analyzing numerical data in large quantities.
• Insurance: A contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
• Finance: The management of large amounts of money, especially by governments or large companies.
• Probability: The extent to which something is probable; the likelihood of something happening or being the case.

Overview

Actuarial Science involves the use of mathematical skills to define, analyze, and solve the financial implications of uncertain future events. Primarily, it is the study of uncertainty and risk, using mathematics, statistics, and financial theory to study uncertain future events, especially those of concern to insurance and pension programs.

Actuaries, professionals who practice actuarial science, use their knowledge of statistics, finance, business, and economics to study uncertain future events, especially those of concern to insurance and pension programs. They evaluate the likelihood of those events, design creative ways to reduce the likelihood and decrease the impact of adverse events that actually do occur.

Applications

Actuarial Science is used in a number of fields, including insurance, pensions, healthcare, banking, business management, and government. In these fields, actuaries are responsible for designing and pricing insurance policies, pension plans, and other financial strategies in a manner that will help ensure that the plans are maintained on a sound financial basis.

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