Have you ever talked with an actuary at a cocktail party? They are easy to spot; generally they are the ones who cannot answer a simple question directly. They feel it necessary to put disclaimers around their answers. I say this with all the love and pride in the world, because I am one of those actuaries.
Let me explain the rationale. Actuaries cannot process a single question without pondering the unspoken variables. The nature of our personalities dictates that we want to ensure that the person who is seeking the answer understands all possible outcomes. In fact, our profession requires that we provide full disclosure in our work, so it’s sometimes difficult to turn off that filter. For those of you who have not met an actuary, here’s an example:
Guest: What color is the sky?
Actuary: That depends….
The simple answer would be “blue”, but as actuaries, before the question is completed, we have conjured up twenty different scenarios and worked through the calculations. “Is it cloudy, are we on the moon, what time of day is it” are just a few of the questions that would cross our minds.
The actuarial profession is so technical that a simple answer doesn’t give you the whole picture; and that simple answer can be completely wrong if the assumptions don’t support the problem. Valuing risk entails understanding those unspoken variables, as those are probably the ones that will create the most turmoil. We have standards of practice that provide the framework for the work we perform and how we communicate the results, in addition to a professional code of conduct that states we can only perform work that we are qualified to do. Those standards are in place so the user of our answers can fully understand the scope of our calculations. So the next time you come across an actuary in a social setting, realize that underneath our answers, the true intent is ensuring you have the correct answer you need.
And in case you were wondering what color the sky is: While I am not trained in meteorology, using a least squares estimation of the daily weather conditions in Santa Barbara, California, I can say with about a 94% accuracy that the sky is blue between the hours of 10am and 2pm.