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Banking Could Offer New Opportunities for Actuaries

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Most actuaries work in such traditional practice areas as insurance, health care, and investments. But according to one expert, they are being increasingly sought after in an area that contains a relatively low number of actuaries: banking.

In an article in South African Insurance Times & Investments News, Michael Tichareva, chair of the Banking and Finance Committee of the Actuarial Society of South Africa, says banks are increasingly recognizing the value of using actuaries for their unique modelling, projection, and risk management skills.

Such skills, he says, are especially valuable for banks developing and implementing economic capital management and risk-adjusted performance measurement frameworks.

Mr. Tichareva says the implementation of Basel II by South African banks has seen actuaries playing a critical role in developing and reviewing banking models required by the regulator. He adds: "It is not unthinkable that in the future the implementation of capital solvency regulations by banks could be overseen by actuaries on an ongoing basis."

He further suggests that a changing regulatory landscape could lead to the introduction of a statutory actuarial function for banks in South Africa, something that currently only applies to life companies and short-term insurers.

Mr. Tichareva's committee is in the early stages of investigating the possibility of introducing a Banking and Finance Fellowship subject for South African actuaries. His society's Fellowship subjects focus on the more traditional actuarial practice areas of long- and short-term insurance, healthcare, and retirement benefits.

He adds that rccent banking bailouts have cost taxpayers around the world trillions, highlighting the need for much improved risk management at banks. "Since risk management is a key component of an actuary's skills set, banks have increasingly been looking towards the actuarial profession to provide the resources needed to accurately assess risk in banking and finance and implement the necessary controls."

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