With data analytics, raw data is analysed to detect trends, answer questions, or draw conclusions from a large batch of data
By Michael Tichareva
Actuarial practice is not a commonly understood field to the general population around the world, with many myths around it. However, in Zimbabwe the actuarial profession has gained publicity and momentum over the years, with many Zimbabwean actuaries, probably more than 100, having qualified through the system over the past three decades.
The pace to qualification has accelerated in recent years, so has the role of actuaries in business and society.
The aim of Actuarial Practice is to use technical and business skills learnt in Actuarial Statistics, Actuarial Mathematics and Business subjects, and combining them with specialised business fields of insurance, pensions, investments, enterprise risk management, and banking among others, alongside tools such as data analytics, artificial intelligence and machine learning to solve real world problems through application of judgment.
To illustrate the field of actuarial practice, let’s use Claxon Actuaries, a young and growing actuarial firm based in Harare and Johannesburg, established by actuarial professionals who saw opportunities in specialised fields in the market, especially relating to emerging areas of actuarial practice such as banking, enterprise risk management and data analytics where the skills of actuaries are already relevant.
This is in addition to traditional areas of actuarial practice like life insurance, general insurance, pensions, healthcare and investments.
The roles by actuaries in banking typically relate to governance, strategy and risk management. Risks range from credit risk, market risk, liquidity risk, operational risk and other business risks.
Each of these risks can be broken down further.
For example, credit risk is a major area of work and can be broken down into loan origination and pricing strategies, monitoring of portfolio trends, capital adequacy assessment reporting, and expected credit loss provisioning under the international accounting standard, IFRS 9.
Given actuaries’ quantitative abilities and understanding of business in the financial world, actuaries play a key role in these areas. This is a major area of focus for Claxon Actuaries.
Enterprise risk management (ERM)
Claxon Actuaries provides advice and guidance to management and boards of directors of institutions in designing and implementing their ERM framework.
The practice of ERM gained significant prominence in the aftermath of the 2008 global financial crisis, and now the Covid pandemic. Institutions of all shapes and sizes should take ERM as an integral component of overall business strategy.
This should be engrained in the institution’s culture.
An ERM framework helps to answer relevant business questions pertaining to an institution’s risk appetite, business strategy; risk coverage, governance & policies, risk data; infrastructure, measurement & evaluation, control environment, response, and stress testing.
Traditional areas of actuarial practice
Other areas of actuarial practice, that are traditional and form the basis of actuarial practice, include life or long term insurance, general or short term insurance, pensions; employee benefits, investments, and healthcare practice. Claxon Actuaries is involved in all these areas.
Currently, the international accounting standard, IFRS 17, is taking centre stage for insurance companies, with actuarial skills highly relevant in the implementation of IFRS 17 due to its complexity.
In all these areas of actuarial practice, Claxon Actuaries uses, among other models, data analytics tools in solving problems. With data analytics, raw data is analysed to detect trends, answer questions, or draw conclusions from a large batch of data.
Using various techniques such as artificial intelligence and machine learning, raw data is converted into a form that allows organisations to analyse important metrics and make business decisions through application of judgement.
The artificial intelligence and data analytics team at Claxon Actuaries, together with the award-winning Microsoft Partner and Oracle Gold Partner, Capesso, has capabilities to apply systems and technology in assisting institutions in their digital transformation journey.
Digital transformation is the cultural, organisational, and operational change of an institution by integrating digital technologies, processes, and competencies across all levels and functions in a staged and strategic way.
Claxon Actuaries leverages systems and technology to create value and new services for institutions through innovation,
thus allowing institutions to acquire the capabilities to become future-ready, agile, and resilient in an increasingly digital economy.
Considering a career in actuarial science
Pursuing a career in actuarial science requires you to have a degree in statistics, mathematics, insurance, risk management, finance, or pure actuarial science among others.
You could also have any other degree with math and statistics as components, but it will certainly be more difficult to complete the post-degree actuarial professional exams to attain one of the designations for an actuarial professional without a good mathematical background.
On completing professional actuarial exams, you are awarded a technical certification, an associate certification or a fellow certification, with fellow status being the highest level of actuarial qualification and the others being intermediate qualifications.
Next week in The Sunday Express – I will share the story of Prosper Tafadzwa Matiashe, a young actuary in based in Harare as I give career advice to our youngsters.
Michael Tichareva is the Managing Director of National Standard Finance Africa and the Executive Chairman of its affiliate, Claxon Actuaries. He can be reached on email@example.com or firstname.lastname@example.org.
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