Enterprise Risk Management (ERM)

Our ERM framework is a management approach that aims to maximize corporate value by maintaining strong financial soundness while balancing capital, risk, and return. It has the goal of increasing profits and achieving steady improvements in capital efficiency. In order to ensure the effectiveness of ERM framework, we have established the Group’s “Risk Appetite Statement (RAS),” which consists of the Risk Appetite Principles, the Medium-term Risk-taking Strategy and the Risk Appetite Indicator, in accordance with the Group strategy and management plan. Based on the medium-term risk-taking direction encapsulated in the RAS, the Mid-Term Management Plan promotes capital circulation that balances capital allocation to existing businesses and growth areas with shareholder returns, while actively allocating capital to areas of high capital efficiency and recovering capital from areas of low capital efficiency in a timely and appropriate manner. Through these initiatives, we aim to achieve our medium-term targets – adjusted consolidated ROE of 13-15% and adjusted EPS growth of over 12% on IFRS basis – by fiscal year 2026, the final year of the Mid-Term Management Plan.
On the other hand, from a defensive perspective, we are working to “strengthen resilience” from two aspects. The first is to "build a resilient portfolio" by constantly reviewing the risks to be taken and those to be avoided in light of rapid changes in the internal and external environment. The second is to “establishing resilient operations” to prevent risks before they occur as well as to continuously provide business and services from the customer's perspective on the assumption that risks will occur by analyzing and visualizing the impact of new risks, such as cyber risk and climate change risk, on the Group.
In an increasingly uncertain business environment, we aim to enhance the Group's corporate value and realize SOMPO’s Purpose by establishing these two “resilience” and by ensuring compliance, which is the basic premise of our business operations.

Sompo Group Risk Appetite Statement

Risk Appetite Principles

• We aim to maximize corporate value by controlling the balance between capital, return and risk appropriately, improving capital efficiency and profit stability, and expanding Group profit.
• We maintain a strong financial soundness in order to provide services that contribute to the security, health and wellbeing to as many customers as possible, as well as value to the society for the future by appropriately capturing and controlling risks that are becoming more complex and diverse.
• We build a global and well-balanced business portfolio for the security, health and wellbeing of our customers in the P&C insurance and wellbeing Initiative, diversifying the source for profits, growing and stabilizing profits by diversifying risks, and improving capital efficiency. To achieve stable profit growth over the medium to long term, we will utilize M&A and other means to take risks by expanding our geographic and business domains, aiming to solve societal issues and achieve substantial growth in corporate value.

Medium-term Risk-taking Strategy

• We shall aim to achieve adjusted consolidated ROE of 13-15% and adjusted EPS growth of over 12% on IFRS basis with securing stable earnings so that we can consolidate the Group’s sustainable growth.
• In the P&C insurance business, while limiting the impact of natural catastrophes and other factors on profit volatility, in Japan, we will transform its portfolio and improve profitability and resilience, and in overseas business, we will achieve disciplined scale and growth. In addition, we will reduce strategic stock holdings and promote asset management that advances portfolio diversification and increases profitability.
• In Wellbeing Initiative, we will proceed creating a platform to deliver products and services aiming to solve societal issues related to health, long-term care and retirement savings by linking each of our businesses, including insurance and long-term care.

Risk Appetite Indicator

• Establish quantitative criteria (e.g., target and acceptable levels) to achieve the vision of the Group's management plan (the following is an example).