Risk Management

Promotion of ERM and Risk Management

The Dai-ichi Life Group practices enterprise risk management (ERM), which is an approach to improve financial soundness and enhance corporate value at the same time. While appropriate risk management is essential to achieve steady enhancement of corporate value, improvement in financial soundness of the Group cannot be achieved without steady enhancement of corporate value.
The Group engages in risk management focused on its goal of achieving steady enhancement of the Group's corporate value and always keeps in mind that resolving social issues from a customer perspective will lead to sustainable enhancement in the Dai-ichi Life Group's corporate value and ultimately lead to improvement of the financial soundness of the Group.
In addition, the Dai-ichi Life Group has set out a Risk Appetite Policy, stipulating its position on risk taking for each risk category.
Based on the Risk Appetite Policy, the Group controls market risks while taking insurance risks under appropriate pricing and product strategy, and has also formulated strategies with the idea of actively engaging in growth markets in Japan and overseas.

Approach to Risk Management in the Dai-ichi Life Group

For risk management, it is important to understand the essence of the life insurance products offered to customers through the life insurance business.
A life insurance product has various characteristics that differ from other financial products. For example, it is a super-long-term product with an insurance term of several decades or more, and there are uncertainties involving cash flows that fluctuate with mortality rates and morbidity rates. Moreover, protection-type products require efforts to identify latent customer needs and are premised on building a group of insured persons to a certain scale.
The practice of risk management with a correct understanding of the Dai-ichi Life Group's business characteristics and revenue and expenditure structure, which is set against the background of these characteristics of life insurance, is important for risk management in the Group.
Furthermore, in today's rapidly changing environment surrounding the insurance business, forward-looking, proactive risk management is essential. For example, in order to ensure success of important projects that have a material impact on the Group, such as M&A or development of new products, we take a risk management approach from the planning stage. In cooperation with the department that is responsible for the project, we manage risk in parallel with the project's progress.

Identifying Material Risks

The Dai-ichi Life Group engages in appropriate risk management that begins from early signs of risks by identifying foreseeable risks that could have a major impact on our business and formulating business plans that take these risks into account.

Material Risks for the Dai-ichi Life Group

• 1. Significant deterioration in financial markets (large fall in interest rates, etc.)
• 2. Major disaster (major earthquakes, pandemics, etc.)
• 3. Inability to adjust to changes in the environment (falling population, changes in customer needs, etc.)
• 4. Brand damage arising from cyber-attacks, system failures, etc.
• 5. Inadequate regulatory capital and decline in competitiveness associated with regulatory changes