A familiar question for actuaries, student or qualified, is: ‘what does an actuary do?’. Friends, work colleagues, US immigration officers and non-executive directors alike have all asked me this at some point. We tend to develop our own responses – ‘insurance maths’, ‘financial projections’ and so on – to move the conversation along, but they probably aren’t great.
For those with a deeper interest, we must go further, spending 10 minutes describing how we apply statistics and modelling to assess and value outcomes for a specific situation. But have we answered the question? With this in mind, it’s a delight to read Catrin Townsend’s new book A Risky Business: An Actuary’s Guide to Quantifying and Managing Risk in Society, which is an overview of actuarial work and its many dimensions.
The author calls A Risky Business “a travel guide through actuarial science, covering history, battles, traditions, what’s hot right now and what’s emerging”. While I am not a member of the target audience, I’d say it delivers on this brief.
It’s not a short book, but it is comprehensive and current with, for example, a chapter on coronavirus modelling. I was impressed by the scale, which covers actuarial activity in general and life insurance, pensions, pricing, funding, reserving and solvency in plain English. There is some high-level maths, but just enough to take the general reader to the edge of A-level.
There is not much on investment matters, which feels right; how investments are used is more relevant to actuaries than the nature of available investments. Given the book’s title, there is little on risk management in the Solvency II world – but, again, this feels right, recognising that the focus is on what makes actuarial work specific to the profession.
A Risky Business also includes a chapter on the history of actuarial science, and draws on historical issues throughout. This is useful, showing how practical problems have been addressed by actuaries and what that means for solving future issues.
Actuarial science has always been a practical discipline. I recall my pensions textbook having a couple of lines about the importance of valuation data quality, which I dismissed as a minor point; six months later, all I was doing was sorting out data issues. A Risky Business brings to life the practicalities that actuaries face. There is a chapter dedicated to data that doesn’t just cover data integrity and completeness, but also issues such as data ethics, General Data Protection Regulation, discrimination, wearables, machine learning, and more.
Who will read this book? As a sixth former or undergraduate considering actuarial work, reading A Risky Business would have left me better informed. Its size is daunting, but for the young, persistent and mathematically minded person, it provides sufficient detail to chew over and challenge, as well as a glimpse of the future of actuarial work. The scope, context and depth will help better inform those who are considering an actuarial career.
Could this book be useful for non-executive directors? Its clarity and breadth would give inquisitive non-actuaries serving on boards an appreciation of actuarial expertise, preoccupation and areas in which we may have a view but not the only view. Such understanding might result in more appropriate challenges, and provide non-executive directors with an idea of the range of issues that their advising actuaries are juggling. I wouldn’t expect them to read the whole book, but it is organised so that chapters can be dipped into as required. The challenge will be keeping the excellent leading-edge material up to date.
A Risky Business is not aimed at me, but was an interesting read and Townsend has done a thorough job. I would comfortably recommend it to those interested in the profession, whether as potential actuaries or because they have more than a passing interest in our work. For the rest, I suppose I am stuck saying ‘insurance mathematics’!
AUTHOR: Catrin Townsend
PUBLISHER: Palgrave Macmillan
REVIEWER: Paul Harwood, actuary and risk manager
