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Actuarial science is primarily concerned with the study of consequences of events that involve risk and uncertainty. Actuarial practice identifies, analyzes and assists in the management of the outcomes — including costs and benefits — associated with events that involve risk and uncertainty. Understanding the principles underlying actuarial science enables actuaries to develop models of such events and other techniques to solve practical problems.


To gain insights about future possibilities, the actuary depends on observation and wisdom gained through prior experience. Actuaries use these observations and experience to construct, validate and apply models. Actuaries continually incorporate additional observations and insights into their models. This feedback cycle systematically addresses discrepancies between these models and observed reality.

Actuarial practice, in turn, is concerned with the assessment of the economic consequences associated with phenomena that are subject to uncertainty. This practice requires an understanding of the principles underlying several fields, including statistics, economics and risk management, as well as the principles of modeling, valuation and risk classification.

Actuaries solve business problems in which the mitigation of negative consequences and the exploitation of positive consequences of risk play major roles. Thus, actuaries must be familiar with the principles of the management of fields in which they work, including insurance, health care and retirement systems, investment portfolios and the risks individuals 6 face. Actuarial models can be developed to solve most of the typical problems that requireanalysis of the consequences of risk and uncertainty.

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