The following is a supplement to the MS & AD Insurance Group's sustainability approach.
FY2021 (April 1, 2021 - March 31, 2022)
See "Corporate Governance" for an overview of the system.
1.Share of the CEO's short-term incentive
- Performance-linked remuneration shall be linked with the business performance of the company and determined based on financial(*1) and non-financial(*2) indicators.The standard ratio between financial and non-financial indicators used in the calculation of performance-linked remuneration shall be“50:50.”
- The stock-based remuneration components of performance-linked remuneration shall be calculated as follows, based on standard amounts for each position
Standard amount per position × business performance coefficient
(financial indicators × 20% + non-financial indicators × 80%)
- The standard ratios of the components of compensation for the President and Director are as follows:
<Breakdown of 25% of Stock-based remuneration>
The ratio of financial indicators (indicators reflecting single fiscal year performance) is
25% × 20% = 5%.
The ratio of non-financial indicators (indicators to reflect medium- to long-term performance
contributions) is 25% × 80% = 20%.
(*1)Financial indicators are indicators that are used to reflect business performance in a single fiscal year in officer remuneration.
(*2)Non-financial indicators are indicators that are used to reflect initiatives contributing to medium- to long-term business performance in officer remuneration.
2．Performance Period for Variable CEO Compensation
- Performance-linked remuneration shall be linked with the business performance of the company and determined based on financial and non-financial indicators.
- Financial and non-financial indicators have been selected after taking into consideration the Group’s Medium-Term Management Plan（FY2022-2025）, which began in fiscal 2022 and will end in fiscal 2025 for a period of 4 years.
3.Claw back Clause
- We have a claw back clause in place. (click here)
Ratio of the amount converted into the fair value of shares to the amount of consolidated fixed remuneration of a person whose total amount of consolidated remuneration in fiscal 2021 is 100 million yen or more.
(*) March 31,2022 end-of-day basis
One of the important risks for our group is the risk of information systems being shut down, malfunctioning or used illegally, or information being leaked due to unauthorized access by cyber attacks or deficiencies in information systems. While cyber attacks themselves are a risk that can occur in the present, .we recognize it is increasing in light of recent geopolitical risks. Our Group makes every effort to improve information technology risk management system but in the event of a cyber attack, large-scale information system outages, malfunction or unauthorized use, and information leaks may occur. The Group also underwrites insurance to compensate for cyber risk, and in the event of a cyber- attack, the Group makes claims payments. Therefore, we recognize that this risk is equally important for MS&AD as (1) a listed company and (2) an insurer.In addition, medium- to long-term risks are expected to steadily increase due to factors as below.
・With the progress of DX and the steady use of cloud computing and remote work, the systematization domain of an organization becomes complex and the boundary with the Internet becomes ambiguous.
・The organization connected as supply chain due to the globalization of business expands significantly
・Digitization will spread at an accelerated pace through new technologies such as AI and quantum technologies.
As the scope of risks expands and becomes complex, damage to our company system and damage to customers insured by our company may become significant.
The impact of this risk on our Group can be summarized in accordance with the above two aspects.
（1）As a listed company:
(2) As an insurer:
(*1) Market value net assets minus the integrated risk amount.
(1)As a listed company:
In order to respond to cyberattacks, multiple layers of defense are implemented, including "entry measures" to prevent unauthorized intrusion, "exit measures" to prevent information leakage, and "internal measures" such as detecting unauthorized viruses and behavior within the Group. At the same time, in light of the fact that the boundary between the organization and the Internet has become blurred due to the use of the cloud and the regularization of remote work, the introduction and examination of security measures are being promoted based on the concept of zero trust. Information on cyberattacks (mass suspicious emails, DDoS attacks, unauthorized access, etc.) on Group companies and other companies is grasped in a timely manner, and the impact on Group companies and the status of responses are confirmed. Technical measures are implemented, such as the introduction of various latest services and products for countermeasures as needed. Personnel and organizational measures are also being implemented, including employee education and training, and drills to prepare for possible attacks. In addition, an organization specializing in security (MS&AD-CSIRT(*2)) has been established to collect information on vulnerabilities in information systems and to coordinate information among Group companies.In addition to the above, the status of security measures is regularly checked by Group companies, including overseas bases, using the Group's common index to continuously maintain and improve the security level of the Group. From a medium- to long-term perspective, we are studying to prepare for the expansion of risks associated with the development of new technologies, such as the establishment of an AI governance system and participation in the Quantum Technology Study Group.
Please refer to ERM and Risk Management for other important risks.
Scenario Analysis has been updated in August 2022 in our TCFD disclosure (link below).
■Scenario Analysis excerpt
|Business area||Contents||Result Examples||Scenario used|
|Physical Risk||Insurance Underwriting||Fluctuation in loss paid by typhoon and storm surge in Japan||
of occurrence -30 to +28%
|Transition Risk||Investment||Impact on investee companies by carbon costs||EBIT at Risk
Low Carbon Price Scenario: 4.66%
Medium Carbon Price Scenario: 9.23%
High Carbon Price Scenario: 20.29%
|Developed by Trucost referring to Nationally determined contributions (NDCs), OECD and IEA.|