You are here

What is data science: an actuarial viewpoint

Data science connectionThe impact of data science on enterprise operations is everywhere to be seen. Affordable, high-performance computer power brings data science applications within reach of the commercial mainstream. Digital disciplines once regarded as rarefied specialisms are bursting onto digital transformation agendas across all vertical sectors.

Actuaries, whose professional skills are predicated on the analysis of data to assess and manipulate outcomes, occupy a unique position. Their job roles in many ways anticipate the outcome-shaping capabilities data science provides and puts them in pole position to turn disruptive change to their ultimate advantage.

Similarities between actuaries and data scientists mean that there’s been growing consideration of how – and where – the two skillsets intersect and the effect that will have on actuaries’ career journeys.

The IFoA recognises this intersection. It has already acknowledged its importance to members in a series of events, institutional initiatives and published guidance. And it has identified a need to provide a point of focus for members and actuarial affiliates who realise that data science will – to some extent – shape our profession as we move into the 2020s.

This content is designed to meet members’ information requirement with respect to data science and its resonance for actuaries and actuarial practice.

Its aim is to bring together the IFoA’s multifarious work and activities in the data science disciplines and highlight the Institute’s understanding of the opportunities data science presents for actuaries to extend their professional status and societal responsibilities.

What is data science?

For such a transformative concept, data science is often not well defined or understood. This does not seem to inhibit its influence – IFoA President John Taylor has described it as necessarily a ‘dynamic and evolving term’.

However, a working definition for data science (rather than of data science) will prove helpful as a start point.

‘Data science’ describes a broad, multidisciplinary field that uses scientific methods, processes, algorithms and systems to extract knowledge and insights from structured and unstructured data. It employs techniques drawn from many fields within the context of mathematics, statistics, computer science, and information science.

The ‘data sciences’ include, or associate with, more focused disciplines: Big Data, Data Analytics, Data Analysis, Data Mining, Artificial Intelligence, Machine Learning, Robotics, Data Visualisation, Predictive Modelling, and Deep Learning.

Data science skills combine domain expertise, programming, software tools and knowledge of mathematics and statistics, to extract desired insights from data – insights that can be translated into tangible and quantifiable business value, such as market intelligence, risk assessment, and executive decision-support.

More on data science:

John Taylor“Data science is very empowering for actuaries: it gives them a platform to move into wider fields.” 

John Taylor, President, The Institute and Faculty of Actuaries 

In February 2018, the IFoA launched a virtual conference on the topic of data science. It was open to members globally to share knowledge and discuss developments and techniques within the discipline.

The conference demonstrated how actuaries can enhance their current knowledge, or move more fully into the world of data science. It offered a platform for members and students to learn more about the subject in sessions curated by leading experts.

Topics discussed included Big Data analytics, Artificial Intelligence, Machine Learning, predictive modelling, data visualisation, neural networks, and coding.

President Taylor said: “What makes the contribution of the profession uniquely valuable to the emerging field of data science is our public interest mission, our grasp of the statistical underpinnings of data science, and our ability to interpret and construct value from data.”

President Taylor believes that the scope of the IFoA’s engagement with data science “demonstrates the way in which the actuarial profession is already taking the lead in addressing the issues that will shape our global society, while deploying our skills and knowledge to safeguard the public interest.”

These issues include ethical questions around how data science changes the way an individual’s risk profile is assessed, through to ensuring that ‘data science’ – in each of its applications* – is well used and understood wherever it’s practiced.

Data Science Q&As:

Where does data science and actuary meet?

Comparisons between actuarial science and data science often use the preposition ‘versus’, although the disciplines are not in necessarily in opposition to, or in contention with, each other.

Indeed, they have much in common, and practitioner skills are increasingly transferable between the two fields.

Usually annexed to the enterprise IT function, data science uses scientific methods, processes, algorithms, and other software tools, to derive insights and knowledge from structured and unstructured data sets.

It brings together established disciplines like statistics, data mining, and data analytics, with emergent tech like Artificial Intelligence (AI) and Machine Learning. Its capability to process a broad range of data sets, and not be constrained to specific types or formats, is generally acknowledged as a key strength.

Actuarial science is a more formalised discipline that categorises interrelated fields, such as computer science, economics, finance, mathematics, probability theory, and statistics.

It’s applied to defined mathematical and statistical methods to assess risk, primarily in the BFSI (banking, financial services, insurance) sectors. Actuarial science is, however, also applied in other industries and professions.

Experts in data science and actuarial science use many of the same techniques when analysing data to make informed forecasts about risk probabilities. These include data visualisation, pattern recognition, and statistics. Three examples of where the two disciplines align are in their approach to data, methodology, and software development.

The primary commonality between data science and actuarial science is their respective appetites for data. The more data they have, the better their analyses turn out.

The IFoA already provides data science collateral for members that ranges from:

“Immersed in business context, actuaries are well-placed to utilise the insights data scientists can generate.”

John Taylor, President, The Institute and Faculty of Actuaries

It’s sometimes asserted that actuarial science specialises in structured data, while data science is most adept working with unstructured data. However, the insurance sector has long recognised the importance of unstructured data.

DataSpace cites the importance of vehicle telematics for data scientists and actuaries alike. For example, telematics provides data that enables data science optimise performance of autonomous cars, while insurance providers have identified an opportunity to use telematics data to adjust premiums based on driver behaviour (‘usage-based insurance’).

Actuarial science’s problem-solving methodology is driven by the standardisation of its analyses, while data science focuses on getting the prediction correct through a variety of methods. Mastery of actuarial methods is largely based on qualified skills and certified learning. Data science practitioners may work without mandatory qualifications or certifications, although this anomaly is changing.

Actuarial science operates on pre-developed software development platforms, and generally uses standard commercial tools and applications. Data science differs in that it routinely develops new algorithms for specific use-cases. Data scientists are, perforce, likely more ‘programming savvy’ than the actuarial scientist.

Filter or search events

Start date
E.g., 22/11/2019
End date
E.g., 22/11/2019

Events calendar

  • Life Conference 2019

    The Convention Centre Dublin, Spencer Dock, North Wall Quay, Dublin 1
    20-22 November 2019
    Fully booked.

    The Life Conference is the premier event for professionals interested in life insurance.  Offering a wide range of workshops and plenary sessions it’s the perfect opportunity to discover what’s hot and current in life insurance ensuring you get up to date on the latest thinking and innovation whilst meeting and exchanging ideas with a broad range of professionals.

  • KSS event: Climate change, ESG and what it means for Insurers

    PwC Edinburgh, Atria 1, 144 Morrison St, Edinburgh
    2 December 2019

    Spaces available

    Speaker: Pallavi Konwar

    Pallavi has a background in banking and asset management as well as within government. She started her career at Wall Street in New York, where she worked for Citigroup on mortgage securitisations and collateral analysis. Before joining PwC, she worked within the Infrastructure UK team at HM Treasury. where she was responsible for contributing to the National Infrastructure Plan and reporting on the performance and delivery of nationally significant infrastructure projects.

  • Autumn Lecture 2019, London - Dr Kay Swinburne

    Lincoln's Inn The Treasury Office, London WC2A 3TL
    2 December 2019

    Spaces available

    We are delighted to announce that Dr Kay Swinburne will deliver this year’s lecture, "It’s not all about the numbers – regulatory challenges for UK financial services post-Brexit"

  • SIAS Event: Discount Rates are Flawed

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    3 December 2019

    Spaces available

    This talk will be given by Jon Spain who, as far back as 1983, has been working independently, trying to bring “long-term” back to UK actuarial thinking. His current focus is on discount rates (see discrate.com).

  • A Holistic Study into Cash flow Driven Investment

    Staple Inn, 4 High Holborn, Holborn, London WC1V 6DR, UK
    4 December 2019

    Spaces available

    Given that Cashflow Driven Investment strategy has attracted growing interests from pension funds and insurers at the backdrop of current market conditions and clients’ circumstances, the objective of this event is to gather thought leaders from asset managers, banks and insurers to offer attendees their perspectives and insights on main aspects of consideration when adopting this strategy.

  • Your Actuarial Career: Managing Career Breaks

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    5 December 2019

    Spaces available

    Maternity or paternity leave, sabbaticals to study or travel, managing care responsibilities or escaping unemployment – Join Chika Aghadiuno and a panel of IFoA guests including Liz Dimmock, Founder & CEO of Women Ahead (International), and Lee Faulkner, Financial Wellbeing Actuary, First Actuarial, to explore the issues around career breaks from the perspective of an employee and an employer.

  • Sessional Meeting - Silent Cyber Assessment Framework

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    9 December 2019

    Spaces available

    The (re)insurance industry is faced with a growing risk related to the development of information technology (IT). This growth is creating an increasingly digitally interconnected world with more and more dependence being placed on IT systems to manage processes. Note: Registration is from 17.30 in time for the sessional to begin at 18.00.

  • CPD Member Event in Shanghai, China

    Function Room, F39, S1 Fuson Group, the Bund Finance Centre, No.600 Zhongshang East 2nd Road, Huangpu District, Shanghai Chinese address:BFC外滩国际金融金融中心,S1复星集团,39层报告厅,上海中山东二路600号
    9 December 2019

    Spaces available

    The IFoA’s President-elect Tan Suee Chieh will visit Shanghai. We will host CPD and Awards Presenting event on Monday 9 December 2019. The event is part of Mr Tan’s first presidential trip to China.

  • Professional Skills Training - London (10 December 2019)

    Staple Inn, High Holborn, London WC1V 7QJ  
    10 December 2019

    Spaces available

    This event will be of interest to students and recently qualified actuaries.

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020.  The content and discussion at this session is particularly tailored to actuarial students and newly qualified actuaries working in any area and the format is interactive, so you should come along prepared to take part in the discussions with your peers.

  • IFoA Joint Member Event with the Sunshine Insurance Group, Beijing China

    Room TBC, Kuntai International Plaza, No.12, Chaowai Street, Chaoyang District, Beijing 地址:会议室待定,北京市朝阳区朝外大街乙12号1号楼昆泰国际大厦
    12 December 2019

    Spaces available

    The IFoA’s President-elect Tan Suee Chieh will visit Beijing. We will co-host CPD and Awards Presenting event with the Sunshine Insurance Group on Thursday 12 December 2019. The event is part of Mr Tan’s first presidential trip to China.

  • ARC Sessional Research Event: Drivers of Mortality - Risk Factors and Inequality

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    6 January 2020

    Spaces available

    The authors will focus on a large dataset obtained from the UK’s Office for National Statistics (ONS) and related sources. Data are available at the level of Lower Super Output Areas (LSOAs) – small geographical areas with, typically, 1000-2000 residents and include death counts, exposures and a significant number of socio-economic variables including the index of multiple deprivation (IMD).

  • SIAS Event: My Journey to Data Science, Big Data and AI

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    7 January 2020

    Spaces available

    Patrick Lee is an actuary who has made the transition to working in software architecture and artificial intelligence (AI). He holds Microsoft Professional qualifications in Data Science, Big Data and AI and is currently working towards a DevOps (the automation of software testing and deployment) qualification. He is a member of the IFoA Council and is also President of the Wessex Actuarial Society. He is also a member of the IFoA and the RSS's joint Data Science Focus Group and will talk on the ethical use of AI. 

  • Spaces available

    This presentation covers the detail for how the matching adjustment is calculated. A small simple example spreadsheet is provided and discussed in detail.

    For actuaries wanting to get more involved with the matching adjustment, this is the opportunity to get a detailed description of the mechanics involved. This includes cashflows derisking, PRA tests as well as hypothecation.

    The presentation is provided by James Sharpe who has worked on a number of matching adjustment calculations with several firms.

  • IFoA Volunteer Recognition Reception

    Staple Inn, 4 High Holborn, Holborn, London WC1V 6DR, UK
    15 January 2020

    Spaces available

    As a thank you to all our Institute and Faculty of Actuaries (IFoA) volunteers, you are invited to join us at Staple Inn Hall, for an evening of drinks, canapes and networking, in London.

    IFoA President, John Taylor, will be attending and will make a speech

    If you support the IFoA as a volunteer (member or non-member), or in any other role, and you are going to be in London on 15 January, please book your place and join us at this reception.

     

  • Professional Skills Training - London (16 January 2020)

    Staple Inn, High Holborn, London WC1V 7QJ
    16 January 2020

    Spaces available

    A Trusted Profession

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Pensions, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • Sessional Meeting - Operational Risk Dependencies

    Royal College of Physicians of Edinburgh 9 Queen St Edinburgh EH2 1JQ
    20 January 2020

    Spaces available

    The Operational Risk Working Party aims to assist actuaries and others in the modelling and management of operational risk. One of the key challenges in modelling operational risk is the modelling of dependencies between operational risks, and between operational and non-operational risks such as market, credit and insurance risk. Their paper seeks to assist in this regard, and help develop good practice in setting assumptions and modelling operational risk dependencies. 

  • Professional Skills Training - Edinburgh (23 January 2020)

    IFoA (Edinburgh), Level 2, Exchange Crescent 7 Conference Square Edinburgh EH3 8RA
    23 January 2020

    Spaces available

    A Trusted Profession

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Pensions, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • KSS event in Glasgow: Public Sector Pensions

    Hymans Robertson, Glasgow 20 Waterloo St, Glasgow
    30 January 2020

    Spaces available

    – the unappreciated key assumption, the resulting unsustainable promises, the unmanaged risk and the unrecognised debt? 

    Speaker: Allan Martin

    Come to your local KSS meeting to discover your future tax paying liability, the massive intergenerational transfer you are making and consider your professional public interest undertaking.

  • ARC Sessional Research Event

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    3 February 2020

    Spaces available

    This sessional will be delivered by members of the research team working on the ARC “Big Health & Actuarial Data’ research programme, led by Professor Elena Kulinskaya (University of East Anglia).

  • Professional Skills Training - London (11 February 2020)

    Staple Inn, High Holborn, London WC1V 7QJ         
    11 February 2020

    Spaces available

    A Trusted Profession

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Pensions, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • Sessional: Impact of E-cigarettes Working Party

    Royal College of Physicians, 9 Queen St, Edinburgh EH2 1JQ
    24 February 2020

    Spaces available

    This sessional meeting will be of direct interest to actuaries and others working in the in the Health and Care, Life or Pensions sectors or indeed actuaries with an interest in morbidity or mortality. Note: Registration is from 17.30 in time for the sessional to begin at 18.00.

  • Professional Skills Training - Edinburgh (25 February 2020)

    IFoA (Edinburgh), Level 2, Exchange Crescent 7 Conference Square Edinburgh EH3 8RA
    25 February 2020

    Spaces available

    A Trusted Profession

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Pensions, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • IFoA Asia Conference 2020, Kuala Lumpur

    CCEC Nexus, 7, Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia
    24-25 June 2020
    Spaces available

    The sixth annual Asia Conference once again offers a prestigious line-up of home and international speakers discussing the insurance and financial industry’s innovation and change in Asia. This year's conference in Kuala Lumpur will be hosted by Tan Suee Chieh, IFoA’s first Asian President. He will also make his Presidential address at this conference and will expand on the important elements of IFoA’s new strategy. 

    Additionally, this landmark conference will showcase how the IFoA is reinventing itself to support its members to succeed and thrive in a digital age, within traditional businesses and beyond, as a global organisation. 

    No tot be missed by international industry players, opinion formers, academic and industry leaders, actuaries and non-actuaries.