Sampo Oyj ANNUAL

Market Risk

32 Risk Management disclosure Sampo Group business and risk strategy Sampo’s strategy is to create long-term value from its non-life insurance operations. The Group’s focus within non-life insurance is on the private and SME business in the Nordic countries, and the digital distribution market in the United Kingdom. Sampo Group is first and foremost exposed to the general performance of the Nordic economies. However, the Nordic economies typically are at different stages of their economic cycles at any given time, for reasons such as different economic structures and separate currencies. Also, geographically the Nordics as a large area is more a source of underwriting diversification than concentration. Hence, the Nordic area is inherently a good basis for a diversified business. Geographic diversification is also extended outside of the Nordics into the United Kingdom and to a smaller extent the Baltics. To further maintain diversification of businesses, Sampo Group proactively prevents concentrations, to the extent possible, by segregating the duties of separate business areas. Despite proactive strategic decisions on segregation of duties, concentrations in underwriting and investments may appear, and hence liabilities and assets are monitored at the Group level to identify potential concentrations at a single company or risk factor level. Underwriting and market risk concentrations, and their management are described in the later sections, as well as the parent company’s role as a risk manager of group-wide risks and as a source of liquidity. Sampo's risk management strategy is to: • Ensure that risks affecting the profit and loss account and the balance sheet are identified, assessed, managed, monitored, and reported in all business activities and at the Group level; • Ensure cost-efficient customer business that is soundly priced in terms of risks and adding value to our customers; • Ensure the overall efficiency and resilience of operations; • Ensure that risk buffers – in the form of capital and foreseeable profitability – are adequate in relation to the current risks inherent in business activities and the existing market environment; • Limit M&A transactions to bolt-ons in non-life insurance within current markets; • Dispose of non-strategic or otherwise unnecessary balance sheet items and distribute the released capital and reserves to the parent