Types of RiskRisk AttributesUnderwritingriskThe risk of incurring losses when economic conditions or the incidence of insured accidents fluctuate contrary to projections made at the time premiums were set.Asset managementriskThe risk of incurring losses due to fluctuation in the value of assets under management (market risk, credit risk, and real estate asset management risk).Liquidity riskThe risk of incurring losses when, due to a temporary increase in surrender value or an outflow of funds owing to a major disaster, Zenkyoren is forced to sell off assets at prices significantly lower than under normal conditions in order to secure the required funds.OperationalriskThe risk of incurring losses due to inadequate internal control systems, or officers and employees either failing to follow appropriate procedures or being the cause of accidents and misconduct, etc.Information system riskThe risk of incurring losses due to computer system failure, malfunction or flaw, or the misuse of information systems.Supervisory BoardBoard of DirectorsCompliance OfficerDeputy Compliance OfficerBoard of AuditorsExecutives Responsible for Compliance DepartmentsCompliance DepartmentsDepartment Executives and ManagersNational HeadquartersCompliance Officer of Prefectural HeadquartersDeputy Compliance Officer of Prefectural HeadquartersPrefectural HeadquartersInternal Audit DepartmentReporting/Liaison RouteInspection RouteExecutives and Managers of Each DepartmentFive Types of RiskCompliance Approach at Zenkyoren Our business is strongly society-oriented by nature. This is why we emphasize compliance as an integral part of our business management.In advancing its approach to compliance, Zenkyoren has assigned a Compliance Officer (President of the Board of Directors) and established compliance departments, with the latter responsible for a range of activities covering overall planning and proposals to adjustments and promotion. Furthermore, each prefectural headquarters has been assigned a Compliance Officer of Prefectural Headquarters (General Manager of the Prefectural Headquarters), with Deputy Compliance Officers (general managers) and responsible managers posted at the departmental level. Every executive and employee strives to ensure that day-to-day operations at their respective worksites take place in strict compliance with applicable laws and regulations. Risk Management InitiativesTo bring a systematic approach to managing various risks, Zenkyoren has formulated a Basic Risk Management Policy, and works to handle risks consistently and appropriately.Under this basic policy, risks are classified and managed systematically as underwriting risk, asset management risk, liquidity risk, operational risk, and information system risk.Structurally, this has involved establishing a Risk Management Department, the department with overall responsibility for risk management, which in addition to overall supervision designates individual departments responsible for properly monitoring and controlling each type of risk.ANNUAL REPORT 201306