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Actuary crunches numbers for risk assessment

Posted by Cindy Atoji Keene  December 18, 2012 09:42 AM

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By Cindy Atoji Keene

Actuarial science is consistently ranked as one of the top jobs, with relatively high salaries, comfortable working conditions, and low unemployment. Actuaries have been compared to cross between a weather forecaster and math whiz, putting a price tag on future risks and applying financial and statistical theories to solve business problems. For James Forbush, partner at Aon Hewitt, actuarial science incorporates aspects of all that he enjoys: math, programming, finance, and consulting.

Forbush, 45, who helps clients design and manage retirement program for their employees, said that many people think he spends his days looking over mortality tables. “I am often asked to try to predict when people are going to die, but while life expectancy is a component of my work, it is only a small piece,” said Forbush.

While actuaries have always been number crunchers for the insurance industries, more and more actuaries are going beyond the traditional arenas to get involved in politics and marketing and other fields, even using predictive modeling to forecast elections.

Q: What are some recent projects that you've worked on?
A: A recent project involved assessing whether a client should offer lump sum distributions to former employees. The company wanted to assess whether it made sense to offer the employees a single lump sum payment instead of lifetime payments many years in the future.

Q: You’ve been an actuary for almost 25 years. How has the field changed?
A: In the past, we used more calculators, manipulated numbers manually, and applied mathematical shortcuts. I remember in some cases carrying around stacks of punch cards from old Fortran processing machines. Today we are ten to 25 times more efficient and accurate than we used to be.

Q: Why is the demand for actuaries so high right now?
A: Many companies have ramped up their focus on risk management in recent years. There are many factors that have caused this, not the least of which are the 2008 market meltdown and large-scale events like the BP Gulf oil spill and Hurricane Sandy. This focus on risk is not a short- term fad but a structural change in how business is managed.

Q: Why did you choose this particular field of work?
A: I was definitely the type of kid who loved math; I was always looking for extra math work to do in school. I spent many hours in my youth wading through baseball statistics. When I graduated from MIT in ’89 with a degree in economics, I first looked for a management consulting job. But during my job hunt, I talked to an actuarial consulting firm and this really made the field come alive for me.

Q: If you ever decide to give up the actuary business, would you consider handicapping races at the racetrack?
A: While the track would be fun, I would definitely head to the casinos and play blackjack. I was always envious of the guys at MIT that I knew who played on the blackjack team for money. I highly recommend Ben Mezrich’s book, Bringing Down the House, about the team’s exploits.

This blog is not written or edited by Boston.com or the Boston Globe.
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