ANNUAL REPORT 2016
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Risk Management SystemZenkyoren has formulated a Basic Risk Management Policy as a framework for an organizational approach to the management of various types of risk. Under this policy, we have categorized our risk exposure into ve types of risk, as shown in the table. Risk management is based on quantitative and qualitative assessments based on the speci c characteristics of each type of risk. At the same time, we apply an integrated risk management approach spanning all of our business activities. We use statistical methods to quantify each type of risk according to uniform criteria. We assess and verify our capital adequacy by comparing aggregate individual risk charges to our nancial strength. At the organizational level, overall risk management activities are coordinated by the Risk Management Department. There are also risk management units responsible for individual areas. This structure ensures effective monitoring and control of risks. We have also established an Enterprise Risk Management (ERM) Committee. Its role is to deliberate on matters relating to risk affecting any aspects of our management and business operations, and to enhance our integrated risk management systems.Five Types of RiskRisk Management StructureTypes of RiskRisk AttributesUnderwriting RiskThe risk of incurring losses when economic conditions or the incidence of insured accidents uctuate contrary to projections made at the time premiums were set.Investment RiskThe risk of incurring losses due to uctuation in the value of assets under management (market risk, credit risk, and real estate investment risk).Liquidity RiskThe risk of incurring losses when, due to a temporary increase in surrender value or an out ow of funds owing to a major disaster, Zenkyoren is forced to sell off assets at prices signi cantly lower than under normal conditions in order to secure the required funds.Operational RiskThe risk of incurring losses due to inadequate internal control systems, or of cers 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 aw, or the misuse of information systems.Supervisory BoardBoard of DirectorsEnterprise Risk Management (ERM) CommitteeRisk Management DepartmentMedical ManagerChief ActuaryLiquidity RiskFinancingSectionsLiquidityRisk SectionsBusinessOperation SectionsIT SectionsOperational RiskInformationSystem RiskInvestmentSectionsUnderwritingSectionsInvestment RiskUnderwritingRiskInternal Audit DepartmentBoard of AuditorsReportInstructionReportInstructionAdviceAdvice, recommendationsAdvice, recommendationsReport14Annual Report 2016

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