Stochastic Modeling — Theory and Reality from an Actuarial Perspective

The International Actuarial Association is pleased to announce the publication of
Stochastic Modeling — Theory and Reality from an Actuarial Perspective
For those interested in understanding this important emerging field, this publication presents the mathematical and statistical framework necessary to develop stochastic models in any setting (insurance or otherwise).

Yves Guérard, Secretary General of the IAA comments: “Our vision statement places the actuarial profession as a major player in the risk management decision-making process, which includes the identification, measurement and management of risk in the assessment of prices, financial reporting values and needed capital. Decision-makers need more than single point estimates like the mean and the variance to compare a range of financial consequences with their risk appetite—as we all know, the devil hides in the tails. This book gives actuaries state-of-the-art tools to characterize degrees of risks in ways that significantly reduce the shadow of uncertainty over the analysis of strategic policy options.”

This publication was produced by a team of talented writers and researchers at Milliman, Inc., and made possible through the generous support of the Actuarial Foundation (United States); Canadian Institute of Actuaries; Casualty Actuarial Society (United States); Financial Reporting Section of the Society of Actuaries; Het Actuarieel Genootschap (Dutch Actuarial Association); and the Institute of Actuaries of Australia. In addition to their financial assistance, representatives from these actuarial associations provided technical guidance and support throughout the project. The IAA is grateful for their contribution to this publication which forms an important part of our research and educational objectives.