Clear and Sustainable Risk Management
In line with the regulatory requirements and our UNIQA Sustainability Strategy, our objective is to develop an appropriate and consistent approach to take sustainability risks into account and apply it on an ongoing basis and ensure it is updated regularly. Incorporating ESG criteria into the risk management assessment process therefore has far-reaching implications.
Addressing opportunities from the deep integration of sustainability criteria into our business model is becoming an increasingly important part of our analyses. In the context of climate risks, the increasing weather extremes are particularly relevant for us, as they lead to an increase in the loss ratio and thus also in the default risks.
The inclusion of climate change scenarios in risk management aims to assess and strengthen resilience to climate-related risks.
We do not define sustainability risks as a separate type of risk, but rather as a general risk classification that influences existing risk categories to which the UNIQA Group is exposed. The results of sustainability risk identification and assessment support management decisions in the context of product design or the company's investment strategy.
Sustainability risks can have actual or potential material adverse effects on the value of the Group's assets, liabilities, financial position or reputation.
Continuous process optimisation ensures security
The UNIQA Group Risk Management actively monitors various developments in the area of sustainability and analyses their impact on the Group as part of the risk management process. To identify further areas for improvement in dealing with sustainability risks and define measures, at UNIQA we monitor developments in sustainability regulation, their impact on the risk management system and analyse market-specific best practices.
Sustainability risks also need to remain controllable
In recent years the UNIQA Group has worked hard on further developing our internal control system (ICS) for risk management. This is used to ensure more efficient processes and reliable reporting. As part of this project, the risk catalog is continuously expanded to include sustainability risks and potential ESG-related causes, ensuring that these risks are explicitly considered. The aim is to capture a comprehensive picture of all sustainability risks while defining and documenting the associated measures.
UNIQA pushes quantitative risk assessment and scenario analyses of climate risks
In assessing sustainability risks, the UNIQA Group currently focuses on climate scenarios from the IPCC (Intergovernmental Panel on Climate Change) and the corresponding RCPs (Representative Concentration Pathways). Both "Early Action" scenarios (i.e., RCP 4.5) and "No Additional Action" scenarios (i.e., RCP 8.5), and their impacts on the value of the UNIQA Group's investments and NatCat claims, are considered.
These two scenarios were chosen as they represent the two most plausible and relevant extremes (high transition risks & low physical risks, low transition risks & high physical risks).
Additionally, UNIQA Group continuously monitors the ESG-related investment profile of its international subsidiaries. Limits are set to ensure ongoing improvement of the Group's ESG profile and reduction of transitional risks.
For each significant residual risk identified, a mitigation plan or strategy is developed, detailing the response to this risk (including sustainability risks or risks with a sustainability-related cause).
Advice on and prevention of natural catastrophes
UCB provides data to the NatCAT Competence Centre (NCCC) to counter climate risks appropriately. The Group's risk exposure and its changes, accumulations and expected annual losses as well as the reinsurance cover required to protect the Group against major natural catastrophes are assessed by NCCC. UCB data is used to validate external models (including NCCC). Their results form the basis of our Group-wide risk management for natural catastrophes. In addition, these models are used to calculate annual stress scenarios to test the robustness of our underwriting and reinsurance cover.