What type of risks does an actuary help assess?

An actuary plays a critical role in the insurance industry by specializing in the assessment of insurance risks. This involves utilizing mathematical and statistical methods to analyze the likelihood of various events, such as claims arising from insured risks. The primary goal is to estimate potential future claims and determine appropriate premiums to cover these anticipated losses while ensuring the financial stability of the insurance company.

The work of actuaries is essential in setting premiums based on the risk profile of policyholders, meaning they need to evaluate a multitude of factors including past claims, the overall risk pool, and various demographic influences. By analyzing these aspects, actuaries can provide vital insights that enable insurers to balance risk with pricing strategies, ensuring that they remain viable and can fulfill their obligations to policyholders.

In contrast, while market risks encompass the financial implications of trading stocks and can affect an insurance firm's investments, and operational risks relate to internal processes and systems, these are outside the primary focus of an actuary's expertise. Similarly, statistical analysis of client demographics, while related to risk assessment, does not capture the overall risk evaluation for setting insurance premiums as directly as the assessment of insurance risks.