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 to deliver target ROE of 10% or more. Under the Mid-Term Management Plan, we have established the “Sompo Group Risk Appetite Statement,” which consists of the Risk Appetite Principles, the Medium-term Risk-taking Strategy and the Risk Appetite Indicator. Based on the medium-term risk-taking direction encapsulated in this statement, we will improve capital efficiency in existing businesses through measures such as: reduction in the strategic holdings of stocks that have low capital efficiency; and strengthening of ALM to continuously reduce interest rate risk.
In addition, we will further improve the Group’s capital efficiency by directing surplus generated capital towards growth areas, with a focus on seeking overseas M&As and digital sector opportunities that can enhance the value, scale and diversification of the Group’s business. Through these initiatives, we aim to achieve our medium-term targets – adjusted consolidated profit of JPY 300 billion or higher and adjusted consolidated ROE of at least 10% – by fiscal year 2023, the final year of the Mid-Term Management Plan.

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 to provide sustainable service and social value to as many customers as possible 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 safety, security and wellbeing of our customers in the insurance and nursing-care fields, diversifying the source for profits, growing and stabilizing profits by diversifying risks, and improving capital efficiency. In order to improve profitability through generating medium- and long-term value, we actively take risks in new business fields, leveraging M&A, and aiming to provide solutions that create social value and to significantly increase our corporate value.

Medium-term Risk-taking Strategy

  • We shall aim to achieve adjusted consolidated profit of more than ¥300bn and adjusted consolidated ROE of 10% or more in the early 2020s by securing stable returns so that the Group’s growth is sustainable.
  • In the insurance business, to pursue “Scale and Diversification,” we shall increase insurance underwriting in overseas advanced economies, while controlling the impact of Nat Cat risks on profit fluctuations. Also, we shall promote asset management to gain return while also reducing stock risk and interest rate risk.
  • In the non-insurance business, we shall aim to create businesses by actively investing in the establishment of the Real Data Platform and related fields to ‘Generate new customer value.’

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).
Indicator Purpose Criteria
Target capital level Appropriate capital level for the group strategy Group ESR: from 200% to 270%
Risk tolerance The level of financial soundness necessary for the Group’s strategy Group ESR: 150%
ESR for insurance companies: 120%
ESR for non-insurance companies: 100%
Minimum level of financial soundness necessary for business continuity ESR for domestic insurance subsidiaries: 100%
Risk diversification ratio Measures to evaluate the degree to which profit stability has been strengthened Improvement compared to the ratio in FY2020
Overseas business ratio 30% or More
  • linkedin
  • facebook
  • twitter
  • line