While they often work with the same information, actuaries and accountants perform very different business functions. These two professions both handle detailed financial data, generate statistics and provide information to help managers make important organizational decisions. Yet for all their similarities, they each serve a different purpose for an organization. Understanding the difference between them lies in knowing what each does, and what functions they perform for a business or organization.
What Actuaries Do
Actuaries evaluate the statistical probability of an event occurring in the future and estimate the likely financial impact of that event. Most often they evaluate the risk of adverse events such as accidents or natural disasters. According to the Society of Actuaries, the majority of actuaries are employed by the insurance industry. They help insurance companies decide which customers to insure and how much to charge in premiums. Actuaries may also be used in any business setting to determine the level of risk for an event, its likely financial impact, and propose methods to prepare should that event occur.
What Accountants Do
Accountants work with the monetary transactions of an individual or organization. The duties of accountants vary from recording transactions to advanced financial analysis and reporting. They may also help prepare tax returns and submit payments to the proper agencies. Certified public accountants obtain special certification that, according to the Pennsylvania Institute of Certified Public Accountants, allows them to audit accounts for both private businesses and public organizations as well as act as consultants on a wide variety of financial, business and tax topics.
These two professions both specialize in collecting and analyzing data, especially financial information. Actuaries and accountants sometimes work together, each using the information generated by the other in their own work. Both generate reports that help managers make critical decisions affecting the future of the organization. Because their areas of expertise overlap, professionals in both fields require knowledge of current business and accounting practices, statistics, economics, taxes and law to perform their job duties.
While the methods of actuaries and accountants may overlap, the focus of their job duties differs. Actuaries deal specifically with risk. They provide a statistical picture of how likely an event is to happen and advise managers on ways to reduce the estimated financial impact of adverse events. Accountants' primary purpose lies in recording and analyzing financial information. Accountants provide information on business or personal finances, focusing on what is happening now or what has happened in the past. Their job duties are much broader than the duties of actuaries, who focus specifically on the evaluation of risk.