IMPLEMENTATION OF AN ACTUARIAL PLATFORM FOR RESERVING AND PRICING
R&C: Could you provide an overview of actuarial science? What kinds of methods does an actuary utilise to analyse the financial costs of risk and uncertainty?
Rivas: Actuaries estimate and manage risk and uncertainty and actuarial science is the set of qualitative and quantitative tools that help actuaries to do their job. Basically, actuaries help companies to assess and value risk in every form – financial, mortality, accident, among others – in order to mitigate or to effectively cover the risk. As actuarial science started in the seventeenth century, many of the traditional techniques do not require the use of complex computation. From the 1980s onward, the advent of personal computers meant a complete revolution in actuarial science. However, many traditional techniques and processes are still in use, some of which were literally implemented before men landed on the moon. Modern actuaries use a wide range of methods to analyse risk, mainly statistical but also stochastic. Actuarial analysis is often business critical and is highly regulated. Regulation in this profession is pervasive – as it is for measuring banking risk – so in most cases actuaries favour the most established and explainable methods, such as generalised linear models or generalised additive models in property and casualty.
Jan-Mar 2021 Issue
SAS