Summary |
Actuarial science applies mathematical and statistical methods to assess risk in the insurance. Actuaries are created out of education but nurtured by practice and experience. The profession of actuary is a combination of a number of interrelating subject such as probability, statistics, finance, economics, and now business strategy as also information technology needed for model building. Actuaries discuss the concepts of risk, return, inflation, and the relationships between them. More importantly, they highlight the concept of ‘Modern Portfolio Theory’ and the role of ‘Efficient Frontiers’ in portfolio selection. Actuaries created deterministic tables in the past for mortality and morbidity, but in modern times the advent of computer-oriented calculations have reduced the requirement of creating such deterministic tables. Instead the actuarial profession is now more empowered for making value judgments based on probabilistic input and output relations.
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