Actuary vs. Risk Manager: What Are the Differences?

Actuaries and risk managers are both professionals who assess and manage risk. However, there are several key differences between the two roles. If you’re interested in a career in risk management, it’s important to understand the different responsibilities of an actuary and a risk manager. In this article, we compare and contrast the job duties of actuaries and risk managers, and we provide information on education and skills requirements.

What is an Actuary?

Actuaries are typically employed by insurance companies to design and decide which policies and premiums to charge for different companies. They carefully analyze each policy to ensure it’ll be profitable and beneficial for companies to utilize. Some Actuaries may work for consulting firms, government entities or pension companies handling their property, life, casualty and health insurance policies. Actuaries typically gather statistical data to analyze, then they present these findings to government officials, shareholders, executives or other clients. They often create and use charts or graphs to better explain their projections, calculations and new policy plans.

What is a Risk Manager?

Risk Managers are responsible for identifying, assessing and managing risks that could potentially impact an organization. They work with company leadership to develop strategies to mitigate risks and protect the company’s assets. Risk Managers create policies and procedures to reduce the likelihood of risks occurring. They also develop contingency plans to minimize the impact of risks that do occur. Risk Managers typically have a background in business, finance or accounting. They use data analysis and risk assessment tools to identify risks and develop mitigation plans.

Actuary vs. Risk Manager

Here are the main differences between an actuary and a risk manager.

Job Duties

Both actuaries and risk managers have similar job duties, but the specific tasks they perform within these duties can differ. Actuaries use data to determine the probability of certain events occurring. They then develop strategies to mitigate the effects of those events. For example, an actuary might analyze a company’s life insurance policies to determine how much money is needed in the event that someone dies. A risk manager evaluates existing risks within an organization and develops plans to prevent future risks from occurring. While actuary work often focuses on mathematical analysis, risk management involves more strategic planning.

Job Requirements

To become an actuary, you need at least a bachelor’s degree in mathematics, actuarial science, statistics or another related field. You must also pass a series of exams administered by the Society of Actuaries (SOA) or the Casualty Actuarial Society (CAS). The number of exams required varies depending on which organization you choose to pursue your designation with, but it typically takes four to eight years to complete all the exams.

Risk managers usually need at least a bachelor’s degree in risk management, insurance, business administration or another related field. Some employers may prefer candidates who have a master’s degree as well. Additionally, many risk managers pursue certifications through professional organizations like the Global Association of Risk Professionals (GARP), the Institute for Business and Home Safety (IBHS) or the American Academy of Financial Management (AAFM).

Work Environment

Actuaries typically work in an office setting, but they may also travel to meet with clients. They spend most of their time using computers and analyzing data. Risk managers usually work in an office environment, but they may also visit construction sites or manufacturing facilities to assess the risk factors for those environments. They often use a variety of software programs to complete their job duties.

Skills

Both actuaries and risk managers need to have strong analytical skills. They use these skills to assess data, identify trends and make predictions about future events. Actuaries also need to be excellent at math because they use mathematical models to calculate the probability of an event occurring and its potential financial impact. Risk managers need to be able to understand complex financial concepts so that they can make sound decisions about how to protect a company’s assets.

Both actuaries and risk managers need to be able to effectively communicate their findings to others. Actuaries often present their findings to insurance companies so that they can make informed decisions about pricing their products and managing their claims. Risk managers need to be able to clearly explain their recommendations to company executives so that they can make decisions about which risks to take on and how to mitigate those that they cannot avoid.

Salary

Actuaries can earn an average salary of $124,755 per year, while risk managers can earn an average salary of $102,474 per year. Both of these average salaries may vary depending on the size of the company at which you work, location of your job and the level of experience you have prior to pursuing either position.