Demand for actuaries on the rise due to changing face of risk

When a vacation is a distant dream, you begin to think about vocation choices. What has emerged since this pandemic unravelled on us is the importance of insurance and its 'recession-proofness'. Yes, when industries big and small crumbled under the pressures of lockdowns, insurance and healthcare sectors were among the few that grew. While obviously there is no upside to something as bleak as a pandemic, insurance awareness saw an uptick. Not just this, for sectors that suffered, what came to light were the weaknesses in the business continuity planning, risk management, scenario and stress testing analyses.

The present and future role of the actuarial profession fits right into this discussion. To quote Dr SC Khuntia, former Chairman, IRDAI, "Actuaries are the conscience keepers of the insurance industry." He also said that India needs a lot more actuaries since there are very few actuaries in India compared to the rest of the world. He quoted that "India has only 460 actuaries for a population of 1.30 billion, while the US has 37,000 actuaries despite having less than a third of the Indian population".

You may remember the uproar created by the announcement made by Elon Musk when he declared that he wanted to recruit "high energy actuaries" to start his insurance company. He made the profession famous overnight!

If this is not validation enough then what is?

Actuaries specialize in assessing the financial impact of future (uncertain) events. They enable sound financial decision making with confidence while balancing interest of multiple stakeholders by:

n Analyzing the past

n Modelling the future

n Assessing the risks involved, and

n Communicating what the results mean in financial terms

The profession has an immense potential for growth owing to the expanding remit of the applications for actuarial science. Actuaries have already proven their mettle by providing professional guidance to drive companies forward during the pandemic and many insurance companies are looking to bring in more actuaries for various functions. Within the (Re)insurance companies actuaries have expanded their scope from statutory roles to broader areas like underwriting, claims management, asset-liability management, risk management, strategy and even leadership roles.

Actuaries also play a key role in the running of retirement benefit schemes (pensions). Pensions is a very important part of the financial system and this is another specialized area where actuaries are involved in making sure the retirement schemes can make payments when they fall due.

Outside insurance too, actuaries are beginning to play pivotal roles in banking, data analytics, Insurtechs, investments etc. This is because the curriculum of the profession is an amalgamation of mathematics, statistics, economics, and finance with focus on business-oriented application of these areas. The demand for these skills is growing across sectors. Actuaries are foraying into all these areas.

With data analytics, machine learning and artificial intelligence being the new driver for change, actuaries have great potential and the opportunity to participate. The backbone of these technologies is statistics and programming; something very core to the actuarial profession.

The introduction of IFRS9 in the banking sector required advanced modelling skills. This made the bankers approach actuaries to help them out with IFRS9 implementation since the actuaries are predisposed to financial modelling. The role of actuaries is also expanding in banking, with more involvement in areas such as credit risk, market risk, stress testing and others.

Environmental, social and corporate governance (ESG) implications are not only crucial for retaining clients, but also vital for ensuring financial decisions manage risks better, resulting in economically efficient and sustainable investment returns. Actuaries are playing a vital role advising companies in aligning with ESG initiatives.

Many Indian actuaries currently support businesses around the world through various outsourcing models. This results in global exposure right in the comforts of our homes. Equally, the profession is recognised globally and presents the opportunity for individuals to explore the world through it. We believe that the fragilities in business continuity and risk management which have surfaced due to the raging Covid-19 pandemic will open up new areas for actuaries. The actuarial training and skill set lends itself very well to even wider areas than those considered above. It is only a matter of time before other industries look to actuaries for advice in these areas.

The scope of actuarial science applications has been on a steady rise which why this field is thriving with exciting opportunities. We both know from personal experience and our ongoing journey of continuous learning and development through delivering solutions to emerging issues and complex challenges, that this is one of the best vocation choices we made for ourselves.

(Sana Konnur is a qualified Actuary and leads the EY GDS general insurance practice. Adeep Jain is a qualified Actuary and a Director with MetLife GOSC.)

(The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of their respective employers nor of the actuarial bodies they are members of)