Risk management

The Board is responsible for defining the Group’s risk management and internal control system through the Group Risk Management Policy, Group Risk Management Framework and Internal Control Policy. The Board also establishes the closely connected Remuneration principles and decides on strategy, performance targets and overall capital management guidelines.

The documents mentioned above set out the Group-level principles, governance structure, roles and responsibilities, and internal control arrangements. Group companies apply these principles consistently across the Group, while adapting their risk management and internal control practices to the specific characteristics of their business activities.

Risk is the effect of uncertainty on objectives. Risk management involves understanding risks, assessing their potential impact and making informed decisions about which risks to accept and which to avoid. Business continuity management and compliance with applicable laws, regulations, internal policies and guidelines are integral to managing risks.

Principles and responsibilities in risk management

The Group’s holding company, Sampo plc, is responsible for the Group’s capital management. Capital management is guided by Group-level solvency and debt leverage targets. This include decisions on Group-level investment exposures, performance targets, reinsurance strategies, capital distributions and capital instrument issuances.

The business functions are responsible for pricing their products and services and organising their sales and development of new products and services. They are also responsible for ensuring the profitability, efficiency, quality, security and continuity of their operations and for meeting their obligations towards customers. The business functions are required to organise their risk management processes – identification, assessment, measurement, monitoring and responding to risks – within the principles described in the Sampo Group Risk Management Policy.

Managing risk includes first and second line roles. First line roles include business functions, most directly aligned with the delivery of products and services to clients, and portfolio management and support functions. Second line roles, including risk management and compliance functions and in the insurance entities actuarial functions, provide complementary expertise, support, monitoring and challenge related to the management of risk.

The third line consists of the Internal Audit function.

Risk management reporting

Group companies have reporting responsibilities both internally and at Group level. Group-level reporting covers profits, risks and capital at least quarterly and is primarily based on Group company reporting.

Reporting reflects the specific characteristics of each company’s business activities and their business environment.