Objectives of ERM
ERM (Enterprise Risk Management) entails the integrated, comprehensive, and strategic assessment and evaluation of all the risks associated with the execution of corporate business activities to enable integrated risk management designed to maximize enterprise value. The MS&AD Group has incorporated ERM as a core component of its management, and it refers to this utilization method as “ERM.”
By means of “ERM,” we will quantitatively and qualitatively determine the Group’s risks from a company-wide perspective and, bearing in mind the characteristics of risks, we will allocate management resources on the basis of risk appetite that provides balanced control of risk, return, and capital. With a foundation of “soundness,” we aim to realize “sustainable growth” and “improvement of profitability and capital efficiency” to increase enterprise value. Next Challenge 2017 includes strategies for making additional progress in our ERM efforts, so that we can elevate profitability and capital efficiency while concurrently ensuring our financial soundness. To this end, we are developing and employing “advanced risk management” methods.
“ERM” Targets and Emphasized Indices
Next Challenge 2017 has set the targets of increasing Group Core Profit to \220.0 billion and raising Group ROE to 7.5% by fiscal 2017. In addition, to ensure financial soundness, the plan set the target of building an AA rating equivalent financial base. To attain these targets, the Group emphasizes the use of two indices – return on risk (ROR), which indicates the balance between the risks the Group is assuming and the associated returns, and the economic solvency ratio (ESR), which indicates the level of soundness.