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Information Session on Second Major in Actuarial Science (SMAS) Second Major in Business Statistics (SMBS)

Information Session on Second Major in Actuarial Science (SMAS) Second Major in Business Statistics (SMBS). What is an actuary? The SMAS What is a statistician? The SMBS Questions and answers Professor Tse Yiu Kuen, PhD FSA Practice Assoc Prof Kwong Koon Shing, PhD ASA.

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Information Session on Second Major in Actuarial Science (SMAS) Second Major in Business Statistics (SMBS)

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  1. Information Session on Second Major in Actuarial Science (SMAS) Second Major in Business Statistics (SMBS) • What is an actuary? • The SMAS • What is a statistician? • The SMBS • Questions and answers • Professor Tse Yiu Kuen, PhD FSA • Practice Assoc Prof Kwong Koon Shing, PhD ASA School of Economics

  2. What is an actuary? • A financial services professional who manages or advises clients on risks of financial events • Work place of an actuary: • Life insurance company • General (non-life) insurance company • Pension fund • Reinsurance company • Others: Investment houses, banks, government, and consulting firms School of Economics

  3. How to become a professionally qualified actuary? • Become an Associate and then a Fellow of one of the professional bodies of actuaries, through exams and other required qualification process • Associate of the Society of Actuaries(ASA): an individual with an understanding of the basic mathematics underlying actuarial science and of the applications to technical actuarial problems. • Fellow of the Society of Actuaries(FSA): has demonstrated in-depth knowledge in a specific area of actuarial practice. • Professional bodies • Society of Actuaries – USA (more than 18,000 members) • Casualty Actuarial Society – USA • Institute of Actuaries and Faculty of Actuaries – UK • Institute of Actuaries of Australia – Australia • Canadian Institute of Actuaries – Canada School of Economics

  4. Typical career path of an actuary • design and run financial models, generate data and information, assist actuary to formulate his/her advice. • specialize in one area – product development, financial projection, risk analysis • while doing the above (in an insurance company) sit for exams (and pass them) • qualify as an actuary (FSA, FIA, FIAA etc) • related career: risk management (e.g., Chartered Enterprise Risk Analyst) Upon obtaining a Fellowship, actuaries are expected to earn at least $100,000 per year (Straits Times, March 20, 2004) School of Economics

  5. What does an actuary study? • Mathematics • Statistics • Economics • Finance • Insurance • Others: Business, Law, Accounting What quality should an actuary possess? • aptitude for Mathematics and Statistics • enjoy problem solving and working with numbers • well-read on business issues and social trends • possess soft skills for communication School of Economics

  6. Job satisfaction ranking in US • 1st Edition (1988) – 1 • 2nd Edition (1992) – 2 • 3rd Edition (1995) – 1 • 4th Edition (1999) – 2 • 5th Edition (2000) – 4 • 6th Edition (2002) - 2 The Jobs Rated Almanac printed six previous editions between 1988 and 2002. In two editions, "actuary" was rated as the best job and in two others, actuary was rated second best. "Actuary" has never been rated lower than fourth, a ranking it received in the fifth edition before climbing two spots in the most recent edition. School of Economics

  7. Second Major in Actuarial Science (SMAS) • The SMAS prepares students for skills and knowledge relevant for • an actuary in the insurance industry • a risk analyst in the finance and banking industry • The SMAS is structured after the Education and Examination (E&E) System of the Society of Actuaries (SOA). School of Economics

  8. The Education and Examination (E&E) System of the Society of Actuaries (SOA) • Validation of Education Experience (VEE) • Four exams collectively known as the Preliminary Education Component (PEC) • Fundamentals of Actuarial Practice (FAP): 8 Modules and two associated exams • Associateship Professionalism Course The SMU SMAS program covers the first two components: VEE and PEC. School of Economics

  9. Validation of Education Experience (VEE) • VEE consist of three components: Economics, Corporate Finance and Applied Statistical Methods. • VEE are acquired in university and not examined by SOA. • SMU has obtained VEE approval (B- and above) from SOA. School of Economics

  10. Preliminary Education Component (PEC) SMAS prepares students for four SOA exams collectively known as PEC. • Probability (P) • Financial Mathematics (FM) • Actuarial Models (M): MLC & MFE • Construction and Evaluation of Actuarial Models (C) The courses at SMU preparing the students for these exams are: School of Economics

  11. Chartered Enterprise Risk Analyst (CERA) under the SOA • CERA is a new designation given by the SOA for professional in enterprise risk management (ERM) within broader financial services, insurance, and pension markets. • The required examinations will include the following: • VEE (only Economics) • PEC (all excluding MLC) • FSA–level Finance/ERM Exam (Advanced Finance/Enterprise Risk Management) • FSA–level Finance/ERM Module (Financial Reporting and Operational Risk) • Associateship Professionalism Course School of Economics

  12. Compulsory Courses required under SMAS • Introductory Statistics B (or Introductory Statistics A, with A- or better) • Intermediate Mathematics for Economics • Probability Theory and Statistical Inference (PEC) • Applied Econometrics (VEE) • Intermediate Econometrics (VEE) • Intermediate Microeconomics A or B (VEE) • Intermediate Macroeconomics A or B (VEE) • Finance (VEE) • Financial Instruments, Institutions and Markets (VEE) • Analysis of Derivatives Securities (PEC) • Financial and Actuarial Mathematics (PEC) • Life Contingencies (PEC) (Pre-requisites: Probability Theory and Statistical Inference, Financial and Actuarial Mathematics) • Risk Theory and Loss Models (PEC) (Pre-requisite: Probability Theory and Statistical Inference) School of Economics

  13. MAS Financial Scholarship Program • An MAS program sponsored by the Financial Sector Development Fund • Program includes Actuarial Science as one of three areas • Sponsor students to do a Master degree in Actuarial Science overseas, such as City U London, U of Wisconsin, U of Waterloo. • 70% funded by MAS, 30% funded by Financial Institution (FI) partner (i.e., insurance company, banks, etc) • Student will be bonded for 2 years to FI partner after graduation • Earliest possible start: AY 2008-2009 • SMU is a partnering university with MAS. School of Economics

  14. What does a statistician do? • collect data • analyze data • draw practical conclusion from data Examples of a career in statistics • actuary • biostatistician • quality control statistician • government statistician • market research statistician • environmental statistician • risk analyst • university professor School of Economics

  15. Examples of Statisticians working on real-life problems • evaluate the environmental impact of air pollution • determine the effectiveness of a new cancer treatment • estimate the Singapore unemployment rate or hospital waiting time • project the Singapore population size • analyze data in court cases, including DNA evidence or discrimination law suits • evaluate the impact of dengue fever outbreak • analyze the consumer demand for a new product • plan and analyze experiments for new product • control and maintain the quality of a product • evaluate the risk of debt default by credit scoring • simulate the traffic flows on petrol stations School of Economics

  16. Second Major in Business Statistics (SMBS) Objectives of SMBS • to equip students with quantitative skills • to enhance the understanding of how Statistics is applied in Business environment Skills Needed • Quantitative: Statistics and Mathematics • Problem solving technique: analysis, organizing and managing projects • Communication: verbal, written, and teamwork • Computing: use of Statistical software and programming • Knowledge of other discipline: for practical applications School of Economics

  17. Second Major in Business Statistics (SMBS) Major requirements • Complete the following 4 courses: • Introductory Statistics B (or Introductory Statistics A, with a grade of A- or better) • Intermediate Mathematics for Economics • Probability Theory and Statistical Inference • Applied Statistical Methods • and …. School of Economics

  18. Cont’d Any 4 of the following courses: • Applied Econometrics • Intermediate Econometrics • Computational Statistics • Financial Data Analysis • Economic Forecasting • Management Science • Sampling Methods • Stochastic Processes and Modeling • Financial and Actuarial Mathematics • Life Contingencies • Risk Theory and Loss Models • Other approved courses Any 2 courses from the Accounting/Business group in the Economics Major-Related module School of Economics

  19. The End Thank you. School of Economics

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