Sustainability Report 2021 04.5 Risk and opportunity management 01 Introduction 04.5.3 Climate and sustainability- activity around climate change and sustainable • Our partnership and memberships as 04.5.4 Risk management related risk governance finance, integration of sustainability and described in section 05.3 facilitate early processes 02 Measuring and climate considerations in business processes, risk detection as well as access to industry managing sustainability In addition to addressing climate-related risks and dedicated projects. Substantial topics are discussions and best practice. Methods of adaptation to climate change as part of our overarching qualitative and channeled to the Sustainability Board to inform • Our regular materiality assessment ranks risks form part of our overall risk management 03 Strengthening quantitative reporting and controlling framework, strategic decision-making. emerging sustainability and climate approach and apply to the whole value chain of our foundation a variety of comprehensive policies and processes Risk and opportunity considerations are issues and opportunities according to our insurance operations, covering all business foster integration of climate-related risks supplemented by additional processes including: their importance for our business and our segments, lines of business, new business and 04 Climate-related and opportunities. • The annual Allianz Risk Barometer produced stakeholders. See section 05.3. in-force business. Relevance of climate change financial disclosure The Allianz sustainability approach integrates by Allianz Global Corporate & Specialty. • Ongoing dialogue with internationally impact and need for adaptation vary across 04.1 Highlights climate- and sustainability-related considerations This is a survey of corporate clients, brokers, recognized non-governmental organizations our portfolios. 04.2 Governance by applying Group-wide corporate rules and industry trade organizations, risk consultants, (NGOs) provides ad hoc and scheduled Insurance-related processes 04.3 Strategy sustainability instruments across all underwriting underwriters, senior managers and claims exchanges on sustainability matters. The NGO 04.4 Strategy resilience, stress-tests and and investment activities. This includes the experts, in total collecting more than 2,650 dialogue is a forum for direct exchange of Product development, risk models and tariff climate scenario analysis Allianz ESG Functional Rule for Investments and calculations reflect expected claims from natural 04.5 Risk and opportunity management the Allianz Standard for Reputational Risk and responses from 89 countries and 22 industry ideas and points of view designed to leverage catastrophes, especially in Property, Engineering 04.6 Targets and metrics Issues Management which establish a core set of sectors. Climate change is ranked sixth. It is NGO’s expertise on climate and sustainability and Motor insurance. In risk segments and lines principles and processes for the management of also linked to Nat Cat risks in third position, matters to support the development of business where significant impact from climate 05 Our universal principles reputational risks and sustainability issues within as a key risk to property business, and gains and implementation of internal policies, change cannot yet be observed, risk patterns and the Group. increasing importance in shaping emission- programs and plans. Allianz listens to the their development are monitored closely (e.g. intensive industries in terms of transition risks. concerns of NGO partners and discusses liability). Coverages and terms and conditions All rules and standards are regularly updated Business interruption is ranked second highest, potential solutions to address these concerns. are designed with respect to changing risk to reflect newest insights and external behind cyber incidents, with potential triggers • Ongoing dialogues with policymakers, patterns, taking all relevant developments into developments. The publicly-available third found in climate-related events. regulators and academia on key economic, account. Terms and conditions and tariffs provide edition of the Allianz ESG Integration Framework You can access the full Risk Barometer here. governmental, environmental and societal incentives for customers to protect the insured increases transparency around internal processes issues, including climate change, to anticipate assets against natural hazards and other climate- and guidelines related to our sustainability • The Global Claims Review analyzes more arising developments and share opinions, related risks, where relevant. approach. We also rely on external providers than 470,000 claims in over 200 countries knowledge and best practice. for data related to climate, sustainability and and territories. The latest Review from In distribution, consulting and advising customers reputational risks. 2019 found windstorms as the only Nat Cat For proprietary investments, the ESG Functional on their risks, based on a thorough individual As an additional layer, the Climate Integration event to appear in the top 10 causes of loss. Rule for Investments provides the foundation for risk assessment, is an integral part of our sales team within Global Sustainability and the Natural catastrophes account for five percent integrating climate-related issues. strategy in retail and commercial business. For our sustainability Task Forces ensure the early of claims in number and 13 percent of total For more details on our activities as commercial business, the sales organization is identification, measurement and business value of all claims. It represents some of the a sustainable insurer and investors, supported by underwriters and risk engineers who integration of risks and opportunities arising largest exposures to energy as well as property see sections 02.1 and 02.2. provide specific advice to customers on protection from physical climate change and the low- and engineering segments. Environmental and and adaptation measures against all types of carbon transition. Examples include regulatory climate change-related liability issues are seen risk, especially Nat Cat and other climate change- to potentially increase in future. related risks. 83