Principles of Actuarial Modelling

Model Foundations for Actuarial Success

Models are central to actuarial work across all subjects, yet their principles often get glossed over. This theoretical course builds your understanding of what models are, why actuaries build them, and how to apply them correctly. You'll explore the components of a model, its limitations, and when to use deterministic versus stochastic approaches. The course covers critical concepts like time horizon selection, stress testing to validate assumptions, scenario analysis to explore alternatives, and sensitivity testing to identify key drivers. You'll also learn to communicate model results clearly—essential since others will rely on your interpretations. This foundation applies across all actuarial subjects, giving you the conceptual toolkit to think critically about modeling in any domain you work in.