Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in finance, insurance, and other industries and professions. Actuaries are professionals who are trained in this discipline.
The main purpose of actuarial science is to inform decision making by identifying and quantifying risk. This information can be used to develop strategies to manage or eliminate risk. For example, actuarial science can be used to price insurance policies in a way that minimizes the insurer’s exposure to losses.
Actuarial science is an important tool in finance because it helps financial institutions such as banks and investment firms identify and quantify risk. By understanding and managing risk, these institutions can minimize their losses and maximize their profits.