Sustainability Risks and Opportunities

Society
Environment
Governance

In a rapidly changing market and social environment, we believe that adopting strategies that identify risks and opportunities that could affect the Group's business help ensure the sustainability of our business. The Group estimates the timelines of associated risks and opportunities of materiality issues identified in the Core Materilality selection process and reflects in our Medium Term Management Plan.

Society

Material issues for the Group	Identified risks and opportunities for the Group		Time Horizon^*
Material issues for the Group	Identified risks and opportunities for the Group		Short Term	Medium Term	Long Term
1Individual health and well-being	Risks	Increase of insurance claims and benefit payments as gap widens between life expectancy and healthy life expectancy		●
		Increase of risks of selection and benefit payment along with the improvement of accuracy in predicting disease risks	●	●
		Shrinkage of insurance market along with the decrease of severity of illness and risk of death supported by the increase of the public's awareness of health and rapid progress in medical care	●	●
		Decrease of attractiveness of products and services due to insufficient understanding of the diverse sense of values, and delays in response to the progress in medical technology and techniques	●	●
		Decrease of employee productivity due to damage to health, increase in employee turnover, and reduction of competitiveness in recruitment	●	●
	Opportunities	Creation of new businesses and insurance-related services that lead to health promotion	●	●
		Provision of products and services that support affluent and daily lifestyles taking into account the increase of awareness of health and progress in medical technology	●	●
		Acquisition of new investments opportunities	●	●	●
		Improvement of employee productivity through the promotion of employee health, decrease in employee turnover, improvement of competitiveness in recruitment, and the improvement of corporate value associated therewith	●	●
2Individual's purpose in life (job satisfaction) and connections with society 3Connections with local community	Risks	Decline of employee productivity due to diluted connections to local communities and decrease of employee engagement, increase in employee turnover, and decrease of competitiveness in recruitment	●	●
	Opportunities	Provision of new services related to the “bond” that requires job satisfaction and mental well-being	●	●
		Improvement of employee productivity through the enhancement of connections to the local community and improvement of employee engagement, decrease in employee turnover, and improvement of competitiveness in recruitment	●	●
		Vitalization of local communities utilizing company-owned real estate, development know-how, and other assets		●	●
4Diversity	Risks	Delays in responding to diversified market needs, and loss of new business opportunities due to the inability to use diverse human resources and the sense of values caused by becoming a highly homogeneous organization	●	●
4Diversity	Opportunities	Innovation creation and improvement of productivity through the creation of an environment which allows diverse individuals to provide ideas freely and engage in creative work	●	●
5Demographic changes	Risks	Shrinkage of the life insurance business along with a decrease in demand for life insurance due to the decrease in the Japanese population		●
	Risks	Decrease in the attractiveness of products and services due to insufficient understanding of rapid demographic changes (declining birthrate and aging population, increase of immigration, etc.)		●	●
	Opportunities	Expansion of the life insurance business along with an increase in demand for life insurance in countries with growing populations in which the Group operates	●	●
		Increase in the need for long-term nursing and end-of-life care due to the declining birthrate and aging population, and increase in the need to secure self insurance and asset formation to supplement the social security system	●	●
		Increase in the need to differentiate employee services provided by companies along with the decrease in the working population in Japan	●	●
6Sustainable financial services	Risks	Market shrinkage along with the removal from universal financial services due to regulations and managerial judgment by financial institutions		●	●
	Opportunities	Creation of new markets by providing products and services, including microinsurance, that meet customer needs in the regions and countries that the Group operates	●	●	●
		Provision of new services that capture opportunities based on an understanding of environmental changes such as the rise of fintech and the democratization of finance	●	●
		Acquisition of new investments opportunities	●	●	●
7Collaboration and outreach with the youth	Risks	Delays in the response to changes over time and loss of new business opportunities due to an insufficient understanding of future generations		●
	Opportunities	Innovation creation and provision of new products and services through collaborations between different senses of value and diverse human resources, including the youth		●
	Opportunities	Creation of new businesses and services through collaboration with the youth	●	●
8Industrial promotion and innovation creation	Risks	Market shrinkage along with the reduction of regional vitality due to regional depopulation, declining birthrate and an aging population, deterioration of social infrastructures, etc.	●	●
	Risks	Decrease of competitiveness due to the inability to keep pace with new innovations	●	●
	Opportunities	Provision of new products and services utilizing IT and digital technology	●	●
		Creation of new businesses and services through collaboration with local communities		●
		Innovation support, resolution of social issues, and acquisition of financial returns through venture investment		●	●
9Provision of sustainable education	Risks	Expansion of economic disparity caused by the expansion and fixation of poverty due to insufficient education, stagnation in growth of countries and societies, market shrinkage in countries where the Group operates, and decrease in financial returns		●	●
	Opportunities	Expansion of the asset formation market through the provision of educational opportunities to improve financial literacy	●	●
	Opportunities	Improvement of corporate brand value through recognition as a company actively providing educational opportunities to improve IT literacy		●	●
10Enhancement of fair and high-quality social security	Risks	Expansion of economic disparity caused by the expansion and fixation of poverty due to unstable and insufficient social security systems, stagnation in growth of countries and societies, and market shrinkage in countries where the Group operates, and decrease in financial returns		●	●
	Opportunities	Increase in the need for private insurance to supplement social security systems	●	●
		Provision of businesses and services for fair and equitable improvement of employee conditions	●	●
		Provision of cutting-edge medical care and acquisition of financial returns through venture investment		●	●
11Business and human rights	Risks	Damage to corporate brand and credibility, lawsuits and administrative penalties, strikes and human resource outflow, divestment and stock price declines in cases of actual or potential violations of human rights	●	●
	Risks	Damage to the Group's asset values in the event of problems occurring at companies purchased, invested in or loaned to, or within the supply chain	●	●	●
	Opportunities	Acquisition of societal trust and improvement of corporate value through recognition as an organization that actively respects human rights	●	●
12Geopolitical risks	Risks	Increase of political and military tensions in countries that the Group operates, and reassessment of business operations and expansions due to state restructuring	●	●	●
		Adverse influence on financial results due to the introduction of new laws and regulations	●	●	●
		Damage to the Group's asset values in the event of problems occurring at companies invested in or loaned to, or within the supply chain	●	●	●
	Opportunities	Expansion of emerging markets along with geopolitical reformations	●	●	●

*Risks focus on the timing of occurrence, and Opportunities focus on the timing of implementation of specific measures. Short-term is defined as 3 years or less (including those that have already materialized), medium-term as 3 to 10 years, and long-term as 10 years or more.

Environment

Material issues for the Group	Identified risks and opportunities for the Group		Time Horizon^*
Material issues for the Group	Identified risks and opportunities for the Group		Short Term	Medium Term	Long Term
13Response to climate change	Risks	Increase in insurance claims and payments due to factors accompanying global warming such as increase in instances of heat stroke, infectious diseases, and flooding due to typhoons, etc.		●	●
		Asset impairment due to market and social environmental changes, decline in investments value of companies due to insufficient responses to environmental changes, such as the development of new technologies for climate change mitigation and shifts in consumer behavior	●	●	●
		Increase in operating costs due to significant changes in carbon taxes	●	●	●
		Damage to reputation and brand value stemming from delayed climate change responses	●	●
		Increase in costs along with the shift to products and services with lower GHG emissions, and measurements of the emissions	●	●	●
	Opportunities	Provision of products and services contributing to the reduction of GHG gas emissions		●	●
		Reduction of operating costs through the introduction of resource-efficient infrastructure		●	●
		Strengthening of investment portfolio resilience utilizing investments assessments related to climate change risks and opportunities	●	●	●
		Acquisition of new investments opportunities	●	●	●
14Renewable energy	Risks	Increase in electricity purchase costs along with urgent implementation of renewable energy	●	●
14Renewable energy	Opportunities	Acquisition of investment opportunities and returns in ventures focused on innovations that contribute to renewable energy and the transition to a decarbonized society		●	●
15Stable energy supply	Risks	Increase in operating costs due to strained energy supply and demand, rise in resource prices, difficulty in stable procurement, etc.	●	●
15Stable energy supply	Opportunities	Acquisition of new investments opportunities	●	●	●
16Response to natural disasters	Risks	Difficulty in predicting insurance benefits due to large-scale disasters	●	●	●
		Significant hinderance to business operations due to physical damage	●	●	●
		Damage to assets that the Group has invested in, loaned to, or purchased due to natural disasters	●	●	●
	Opportunities	Provision of products and services that lead to natural disaster preparedness	●	●	●
	Opportunities	Acquisition of new investments opportunities	●	●	●
17Loss of natural capital and biodiversity	Risks	Reduction in the business performance of companies that the Group has invested in or loaned to, as well as other business partner companies, stemming from damage to natural capital		●	●
	Risks	Decline in reputation and brand value, as well as potential litigation, due to delayed action on the conservation of natural capital and biodiversity	●	●	●
	Opportunities	Gaining credibility from society and improving corporate value through recognition as a company that actively promotes natural capital and biodiversity conservation	●	●
		Enhancing the value of owned real estate through greening initiatives	●	●	●
		Acquisition of new investments opportunities	●	●	●

*Risks focus on the timing of occurrence, and Opportunities focus on the timing of implementation of specific measures. Short-term is defined as 3 years or less (including those that have already materialized), medium-term as 3 to 10 years, and long-term as 10 years or more.

Governance

Material issues for the Group	Identified risks and opportunities for the Group		Time Horizon^*
Material issues for the Group	Identified risks and opportunities for the Group		Short Term	Medium Term	Long Term
18Corporate governance management and anti-corruption	Risks	Business activity downturn, damage to reputation, brand value, and credibility with customers due to insufficient governance, including compliance issues caused by an insufficient understanding of management principles and the code of conduct	●	●	●
	Risks	Damage to the Group reputation due to the inappropriate responsible investments activities	●	●	●
	Opportunities	Stabilization of business operations through highly transparent decision-making and appropriate responses to environmental changes	●	●
		Implementation of appropriate supervision by the Board of Directors, improvement of corporate governance through further enhancement of supervision, building credibility with stakeholders associated therewith, and improvement of corporate value	●	●	●
		Stabilization and expansion of financial returns through the improvement of governance of the companies that the Group has invested in, or loaned to	●	●
19Cyber security	Risks	Suspension of services and asset management businesses due to cyber attacks and system failures	●	●
	Risks	Damage to reputation, brand value, and credibility built with customers when cyber security risks arise	●	●	●
	Opportunities	Acquisition of credibility from society and improvement of corporate value by being recognized as a company actively taking cyber security measures	●	●
20AI technology and DX	Risks	Information leaks and violation of rights stemming from lack of proper AI and technology controls	●	●
	Risks	Reduction of competitiveness due to lower or delayed implementation of initiatives than other companies, or inability to respond to radical innovations	●	●
	Opportunities	Expansion of product lines based on accumulated big data	●	●
		Provision of optimal services by utilizing customer data, including consumption activities	●	●
		Diversification of sales channels utilizing digital technology and improvement of customer services	●	●

*Risks focus on the timing of occurrence, and Opportunities focus on the timing of implementation of specific measures. Short-term is defined as 3 years or less (including those that have already materialized), medium-term as 3 to 10 years, and long-term as 10 years or more.