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Climate-related Risks and Opportunities

Sampo Group’s risks are being forecasted based on the subsidiaries and associated companies’ risk and capital forecasts on a consolidated basis. The forecasts of each subsidiary are based on common group-level scenarios given by the parent company, Sampo plc. Sampo plc manages key financial strength metrics for the consolidated Group based on these analyses. Sampo plc is currently in the process of developing climate risk scenarios that would forecast long-term risks and capital needs driven by climate change.

Climate risk scenarios are also used in investment operations. The first climate impact assessment of the Group’s investments was conducted in 2019 by an external service provider. The Group companies’ investment units are currently investigating how to incorporate scenario analysis into investment processes.


Sustainability is an integral part of If’s core business and integrated into the company’s strategy. If’s strategy framework, One If, consists of four strategic foundations: Customer, Risk, People & Culture, and Sustainability. Further, the strategic foundation Sustainability is built on three commitments: Commitment to customers, Commitment to employees, and Commitment to society, with climate being an integral part of all three commitments.

If supports the transformation to a low-carbon society and is committed to setting science-based targets, which are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement, limiting global warming to well below 2°C, preferable 1.5°C.

Climate-related risks

For If, climate-related physical risks are relevant in the short-term and are likely to grow in the mid- to long-term.

In the short-term, risks arise in the form of changes in claims frequencies and/or severity of the climate-related physical risks that are already relevant in the current Nordic climate, such as windstorms, floods, heavy rainfall, landslides, erosion, and heatwaves. In the short-term, windstorms dominate If’s claims portfolio, but there are also some indications that hail could become more frequent. In the Nordic region, inadequate municipal sewage systems and major new housing developments close to water present potential problems due to the expected increase in precipitation and rising sea levels.

In the mid- to long-term, increased weather-related losses will likely increase the exposure for If and for other P&C insurers.

Climate-related opportunities

Increased climate-related physical risks could also lead to increased demand for insurance products and services providing protection against physical risks and supporting climate change adaptation. Risk management services are part of the insurance programme and not a separate service. If offers advanced risk management services for major corporate clients with business operations around the world. If's risk engineers conduct on-site risk assessments and provide recommendations on concrete and cost-effective preventative measures. If also has services for SMEs, providing clients with loss prevention services for different kinds of damage. If, in cooperation with Anticimex, offers house assessments to private customers who own their house and hold a house insurance policy with the most extensive cover. If also supports and participates in a number of research projects in the Nordic region in order to better understand climate-related physical risks and develop preventative measures.

Impact on business, strategy, and financial planning

If’s yearly planning cycle begins with a strategy revision based on market outlook, trends, and risks. The strategic direction, together with planning assumptions and management directives, is translated into focus areas and indicative financial targets with input from risk heat maps and risk-based targets. The indicative targets are the basis for the detailed three-year financial plan.

As part of the planning process, external factors impacting If’s portfolio are closely followed, including for example windstorms, sea temperature, and flooding. Pricing is typically based on claims data and portfolio results, i.e., trends in claims will influence price. Physical risks could affect reinsurance prices. However, natural disasters are rare in the Nordic region compared to the rest of the world and reinsurance prices for natural catastrophes low in relation to inward premiums.

Currently, insurance policies in the Nordics typically provide extensive protection against natural catastrophes. If the claims frequency is very high for a specific object, If can limit the insurance coverage, or increase premium/deductible, for that specific object eventually. Reinsurance is used to manage the aggregated exposure to natural catastrophes.

If measures the exposure of its equity and fixed income investments to physical and transition risks annually. According to the analysis, If’s investments are not exposed to a high level of physical risk, either chronic or acute, based on their sector and geographic region. The transition to a low-carbon society with potentially increasing environmental and climate regulation, more stringent emission requirements, and changes in market preferences could affect the value of If’s investments. However, almost half of If’s investments are in the financial sector, where the exposure to transition risks is considered relatively low.

Scenario analysis

If’s risks are measured, aggregated, analysed, and reported regularly for the purpose of performing an overall assessment of risk and capital. The outcome and the follow-up of risk reporting procedures are documented as part of the quarterly ORSA process. If’s capital planning model is a tool used in the ORSA process, which forecasts own funds and capital requirements over a three-year planning period. The assessment also includes a number of scenario analyses, stress tests, sensitivity analyses, and reverse stress tests, including scenarios relating to natural catastrophes. In addition to quantification of If’s main risk categories, a qualitative assessment of If’s key risks over the planning period is conducted.

If has started the work to analyse climate change risks and embed the analysis in the Risk Management System, but further work is needed to define, understand, and quantify the risks so that more robust conclusions can be drawn. In terms of scenario analysis, If has so far qualitatively assessed the impact of reasonable and relevant outcomes in three different climate change risk scenarios on i) solvency and capital, and thereby implicitly on policyholder protection, and ii) business strategy. The three risk scenarios used are the Paris Orderly Transition, Paris Disorderly Transition, and Failed Transition.

More information is available in If’s Sustainability Report.


Topdanmark supports the Paris Climate Agreement's target of a maximum temperature rise of 1.5°C by 2050, and the Danish government's target of a 70 per cent reduction of GHG emissions by 2030. Against this background, Topdanmark strives to further integrate climate and environmental risks and opportunities into the company’s business strategy, investment activities, and business operations in general.

Climate-related risks

Storms and cloudbursts are considered the most significant climate-related risks in the future. Large weather-related damages caused by cloudbursts may affect Topdanmark’s business substantially due to an increased number of claims and consequently an increase in compensations paid.

Identified transition risks include risks related to regulation, new technologies and materials, and changes in market preferences. Topdanmark actively scans all emerging national regulations, standards, and legislative matters in order to respond to any changes in the regulatory environment.

Climate-related opportunities

Development of new products and services is part of Topdanmark's normal business development and innovation. Topdanmark follows trends and development closely, and endeavours to be ready to support and insure new sustainable solutions which the company’s customers might wish to implement or use, and which will reduce the environmental footprint.

Identified climate-related opportunities include insurance products and services that mitigate weather-related events. This is seen, for example, in an increased demand for Topdanmark’s crop insurance, which provides compensation for loss of crop yield caused by extreme weather.  Climate change adaptation also means including climate and environmental aspects in the claims process, for example by promoting recycling and repair and reducing emissions in the repairing process.

Topdanmark’s objective is to introduce five new products or services that support the customers in reducing GHG emissions and making sustainable choices by 2025. The products should be aligned with the EU Taxonomy.

Impact on business, strategy, and financial planning

In the medium term, extreme weather events like storms and cloudbursts are expected to increase. Preparing for a potential increase in weather-related claims and/or more severe damages is part of Topdanmark’s business strategy and risk management in order to prevent negative financial impact. Weather-related claims are monitored to prepare for new situations. Risks associated with weather-related damage are strictly calculated and prices are set according to the risk scenario. Topdanmark is continuously testing several acute physical natural catastrophe scenarios, including atmospheric events, mapping a range of perils and regions. The results provide the basis for Topdanmark’s risk management, monitoring limits and subsequent business decisions. Topdanmark also limits its insurance risk and financial impact through a comprehensive reinsurance programme.

Scenario analysis

Topdanmark uses an internal risk model, which also includes extreme weather conditions. The model provides the information and input required for the Board of Directors, Executive Board, and managers both as far as risk management and opportunities are concerned – on current as well as future scenarios. The model is partly based on historical data, but trends in the number of extreme weather events and claim sizes are also incorporated into assessments. The internal model is subject to scenario analyses and stress tests.

In investment management, Topdanmark uses scenario analysis to analyse climate-related risks related to the company’s listed equity portfolio. The analysis includes all Topdanmark’s listed equity investments and is based on a range of scenarios including the sustainable development scenario where the temperature increase is limited to 1.75-2°C.

More information is available in Topdanmark’s TCFD and CDP reports.


At Hastings, climate related risks are currently identified on a high level, and the company will complete a detailed risk assessment during 2022.

Hastings reviews its sustainability strategy on an annual basis taking into account carbon footprint, emissions, environmental impacts, and related risks. As a part of the review, Hastings investigates signing up to the Science-Based Target initiative (SBTi) in 2022 and setting targets and risks analysis in line with the Paris Climate Agreement. In addition, the company will consider scenario planning as part of detailed risk assessment and business modelling during 2022.


Climate risk in life insurance

As Mandatum Life Insurance Company (Mandatum Life) operates in the life insurance business, the short- and medium-term impact of climate change is expected to be limited and contained to indirect effects associated with capital markets volatility and changes in longevity and mortality trends. However, the long-term effects of climate change remain unknown and may therefore have broader implications for the business. 

Climate risk in investments

Mandatum Asset Management (MAM) manages Mandatum’s proprietary assets as well as client assets, which are both exposed to climate-related risks. Sustainability risks are at a moderate level in Mandatum’s asset portfolio, and especially climate transition risk is relevant for the investment portfolio. 

Mandatum aims to be a part of the solution to the climate crisis by thoroughly analysing investment opportunities with a set of climate-focused criteria. In addition to sector-based negative screening, Mandatum focuses on finding companies that, for example, provide technological innovations to mitigate climate risk.  

Mandatum’s ambition is to reduce exposure to the fossil fuel industry while simultaneously investing in companies that provide energy from renewable resources or that have credible plans to transition from fossil fuels to a more sustainable business model. As part of the evaluation of transition companies, Mandatum assesses, among other things, the companies’ energy mix and proportion of renewables, plans to grow the renewable energy business, and emissions reductions targets. Mandatum’s goal is to phase out coal (companies that derive more than 5 per cent of their revenue from coal) from its investment portfolio by 2030 and oil (companies that derive more than 5 per cent of their revenue from oil) by 2040. 

Climate transition and integration of climate-related risks into the investment process is one of the focus areas in portfolio management of the company assets as well as client assets. In addition, wealth management clients are offered specific investment solutions that promote climate transition and reduce the carbon intensity of investments. 

Updated 7 Feb 2023