The T&D Life Group categorizes and defines management risks and the appropriate responses as follows:

This is the risk of losses from unfavorable gaps between the actual occurrence of insured events and assumptions made at the time of pricing due to changes in the status of the economy, disasters, etc. Based on an awareness of the major impact that life insurance underwriting has on business over the long term, the Group determines, analyzes, and assesses the insurance underwriting risk and carries out appropriate controls.

The T&D Life Group breaks down and manages investment risk based on three categories:1) market risk, 2) credit risk, and 3) real estate investment risk.
The T&D Life Group controls investment risk by setting permissible risk limits based on the capital adequacy of the three respective life insurance companies, thereby controlling risk exposure within a specified target commensurate with the financial condition of individual companies. Also, T&D Holdings monitors the concentration of credit in specific industries/groups and oversees the management/recovery of problem loans.

This is the risk of suffering losses from changes in the price of assets due to changes in interest rates, securities prices, and foreign exchange rates as well as various other risk factors.

This is the risk of suffering losses from a decline in the price or the complete eradication of the value of assets due to a deterioration of the financial conditions of obligors.

This is the risk of suffering losses from a decline in real-estate-related revenue due to changes investment risk in lease fees or other factors, or from a decline in the value of real estate itself due to changes in market conditions.

Liquidity risk is divided into two categories:1) cash flow risk and 2) market liquidity risk.
The T&D Life Group has established classifications according to the degree of cash flow tightening, and it has formulated methods for managing each classification to secure a certain level of liquidity. Simultaneously, it carries out proper risk control to reinforce its system for smoothly liquefying assets to procure funds.

This is the risk of suffering losses from having to sell assets at significantly disadvantaged prices to secure funds and/or from deterioration in cash flow due to the outflow of funds due to a major disast.

This is the risk of suffering losses from the unavailability of trading prices in the market or having to trade at a significantly disadvantaged price owing to market disruptions or other factors.

This is the risk of suffering losses from officers or employees neglecting to perform accurate operations and/or causing accidents, performing illegal acts, or leaking information. Recognizing all operations entail administrative risks, the T&D Life Group strives to reduce or prevent these risks by strengthening the operational risk management systems at each Group company.

This is the risk of suffering losses from computer system downtime, malfunction, misoperation, or other system flaws. Cognizant of system risk in all of its operations, the T&D Life Group strives to reduce or prevent system risk and minimize losses at the time of risk occurrence by strengthening its system risk management system.

This is the risk of suffering losses from neglecting to comply with all laws and regulations. The T&D Life Group strives to prevent the occurrence of legal risk by promoting compliance. Also, if there is a risk of losses, including compensatory damages, due to legal action or other such incident, the Group seeks to minimize losses by seeking early resolution through consultation with legal counsel.

This is the risk of suffering losses due to such labor and personnel problems as those related to hiring, labor management, personnel outflows, and human rights. Recognizing that labor/personnel risk exists for all Group companies, the T&D Life Group seeks to reduce or prevent such risk and deal appropriately with unavoidable problems by establishing effective administration systems.

This is the risk of suffering losses from the lack of contingency plans or emergency measures for large-scale disasters. The T&D Life Group strives to reduce or prevent hazard risk by assuming the possibility of disasters, including major earthquakes and damage due to wind and floods, and establishing preventive measures and strengthening emergency response systems.

The T&D Group refers to the above five categories of risks between 4 and 8 as operational risk.

This is the risk of suffering losses from the occurrence of a situation that adversely impacts the earnings of Group companies or causes a decline in share price, resulting from the spread of negative information about the creditworthiness/negative evaluation of the Group or the life insurance industry by policyholders, investors, the mass media, the Internet, or the public at large. The T&D Life Group works to contain rumors and information related to rumor risk and strives to reduce or prevent rumor risk through an accurate response/reporting system.

This is the risk of suffering losses from the deterioration of a life insurance subsidiary's affiliate or other adverse factors. The T&D Life Group works to assess the income/expenditure situation as well as the potential for the occurrence of various risks at the affiliates of life insurance companies and carries out proper risk control.