2. A Commitment to Transformation Based on a Strong Sense of Crisis
(1) Digital Disruption
A strong sense of crisis led the Sompo Group to initiate self-transformation. We saw that the traditional P&C insurance company business model would become unsustainable.
The Group started as a P&C insurer. Our role has always been one of mitigating negative events by restoring things to their original state. In other words, when customers suffer losses due to accidents or fires, we pay benefits. We realized that the importance of P&C insurance would remain unchanged. Nonetheless, advances in solutions that use innovations in AI, Internet of Things (IoT), and other digital technologies to reduce or prevent accidents, fires, and injuries created a strong sense of crisis accompanied by a conviction that we had transform ourselves.
Further, many different businesses and industries are getting involved in digital disruption, which gives rise to completely new business formats through innovations in digital technologies. Similarly, the Group’s mainstay insurance business will be drawn into the whirlpool of digitalization as self-driving technology for automobiles advances, and companies from other industries enter the insurance business.
If new technologies are to break up our business model, we would prefer to do the breaking up, reinventing ourselves in the process. Based on this conviction, we decided to take advantage of our core competence in digital technologies to move forward with Group-wide innovation focused on creating new customer experiences.
(2) Operating Environment
Our operating environment is changing dramatically.
As well as the effect of COVID-19 on day-to-day life, a low-interest-rate environment, more-severe natural catastrophes, and the threat of cyberattacks have become part of the “new normal” worldwide. Also, rapid globalization and digitalization have produced inequality and divisions in societies, driving the emergence of populism and authoritarianism. Moreover, divisions and conflicts among generations and between developed and emerging countries are become increasingly serious.
In response to the rapid changes in the current operating environment, we must reexamine, redefine, and rebuild existing business models based on insight into the true nature of things that is unconstrained by the past or by established practices.
(3) Japan’s Role
I feel that the volatile operating environment has set the stage for Japan to play a greater role in international society, particularly given the lessons the country has learned in the process of steadily overcoming a series of natural catastrophes and other challenges.
In my view, Japan’s companies should rehabilitate their traditional corporate philosophy and values, which focused on simultaneously benefiting three parties: the buyer, the seller, and society. I believe Japanese companies can contribute to solutions that help the world address inequality, division, and other issues inherent in capitalism. Japan is the first country to encounter certain major social issues, including how to maintain a nation’s finances and social welfare system in response to a rapidly aging population and a contracting working-age population. By implementing an optimized societal model in response to such social issues and disseminating it, Japan can make itself valuable and indispensable to the common good of the world.
(4) Concrete Action for a Sustainable Society
Every year, I attend the meeting of the World Economic Forum, often called the Davos Conference. In 2020, the forum hosted numerous discussions on sustainability under the theme of “Stakeholders for a Cohesive and Sustainable World.” The forum left me with the strong impression that as such issues as climate change, human rights, food, energy, and loss of biodiversity become increasingly interrelated and complex, we as the earth’s stakeholders need to take concrete action aimed at leaving a sustainable society to future generations. The discussions reaffirmed that, with 10 years remaining until 2030—by which time the sustainable society targeted through the Sustainable Development Goals (SDGs) should be realized—concrete action is expected not only from governments and citizens but also from companies.
The 2021 Davos Conference will be themed on “The Great Reset,”*in other words a commitment to laying the economic and societal groundwork for cooperation that creates a fairer future that is more sustainable and has greater resiliency. As society undergoes significant changes and a range of social issues surface, in partnership with stakeholders we must take concrete action to build an inclusive society in which “no one will be left behind.” My sense of crisis stems from the fact that failure to do so may result in our elimination from society.