Estimation of risk No.

1 Risk Likelihood Consequence Impact Possible Moderate Unprecedented Risk from risks to the AIA climate change but also created opportunities to the AIA to provide the insurance services to customers for helping they reduce their losses cause by climate change. Treatment Accept and avoid Withdrawing from high-risk markets, increasing premiums or deductibles, and limiting the maximum payouts allowed for a given claim. Purchase reinsurance, and endeavour to shift risks to self-insure and the capital markets to protect themselves against the climate change losses.

Risk from Demographic shifts in core markets

Possible

Minor

Created risks to the AIA but also created opportunities of increasing of demand for insurance products to the AIA

Manage Make sure that the insurance product of AIA must be better than the insurance product of other company. Design the insurance product that can suit with requirement of their customers.

Risk from catastrophic events

Likely

Major

Devastate AIA that is unprepared for a large scale, massive payout. It also results in the increasing of demand for insurance products.

Accept and avoid Using catastrophe modeling software to help analyze the risk involved with certain insurance policies If the catastrophe modeling software predicts the cost is so high, AIA would choose not to provide the insurance to the customers to avoid the losses.

Risk from Regulatory intervention

Unlikely

Moderate

The increasing of No actions need to be taken. scrutiny impacted on AIA - make sure the level operations and risks of regulatory practices. intervention always achieved the satisfaction level Cause the costs to AIA for try the best in prepare for the sweeping changes in channel distribution Legal penalty and legal charges Manage Involving in multichannel distribution and integrating delivery channels.

Risk from Channel distribution

Possible

Insignificant

Legal Risk

Likely

Major

Manage Appoint Legal Experts.

Risk of loss of employee

Rare

Insignificant

Loss talents of the company

Manage More efficiency and effectiveness performance.

Fraud risk

Almost certain

Moderate

Loss of profits, customers and reputation.

Manage Whistle-blowing Reward system

Advertising risk

Rare

Major

10

Concentration risk

Possible

Moderate

False or Manage misleading of information, legal - Review and revise penalty and loss advertising and of potential promotional materials. customers Loss of current Manage and potential customers. Less - New appropriate and competitive with adaptable insurance other companies. plans. Face a loss and huge debt from its credit activities. Manage Only select those institutions with good and stable financial

11

Credit risk

Possible

Catastrophic

condition. 12 Liquidity risk Possible Catastrophic Face large problems in its capital turnover especially when a huge amount of money is needed in its operation. Loss due to the changes in the currency rate. Manage Not taking too much short-term investment.

13

Currency risk

Rare

Moderate

Transfer Transferred to bank or other financial institutions.

14

Reputational risk

Almost certain

Catastrophic

Lose public trust which will affect the trustworthiness of the business if some problems incur. Loss of income in its current business activities will cause the company to bankruptcy.

Avoid Provide good services to policy holders and be ethical in conducting their business.

15

Profit risk

Likely

Catastrophic

Manage Diversify income by expanding more markets and its delivery channel by employing more salespeople worldwide.

16

Systemic risk

Unlikely

Major

If there is only one or two insurers sell some important type of product, a failure of one of them could cause a big problem.

Manage sharing the existing risks among many players and allowing diversification of exposures and by spreading the cost of losses on insured events

17

Political risk

Unlikely

Minor

Indirectly affects the profit or saving plan

Manage

18

Policy attrition

Likely

Minor

19

Unanticipated expense overruns

Likely

Major

introduced by - introduce the shortAIA Berhad and period saving plan to the foreign their customer, for exchange rate instance, 5 years changed, it will saving plan and make causes whether it attractive profit or loss to company. There are Manage argument regard to the claims and - amend the terms and if the claims are conditions to fulfil the not approved demand of customer; and the make the claimable argument events and amount disclosed to transparency to their public, it will customers affect the image of company If the Avoid unanticipated expenses are - Set the limit of the overruns, it will expenses can be cause a big claimed and only can expense to the claim for the expenses company and the related to the profit of the business activities and company will show the receipt. reduced. Make the Avoid investment without any - make inspection inspection will toward those cause the loss to companies being the company and invested as well as may be the their financial position liability to the and situation of those company. companies Negative: AIA faces challenges. Loss in profit. Pressure the employees. Manage - make sure that its insurance products have distinction with the others - produce cheaper insurance products

20

Ill-disciplined investment activity

Rare

Catastrophic

21

Risk from rivals

Almost certain

Catastrophic

Positive: Enhance their services. More effective and efficiency. Profit increase. Profit reduces. Bad image and reputation to AIA.

22

Risk from Customers

Almost certain

Major

Manage Identify the problems brought by different. segments of customers Provide more different protection policies. The agents should be lead by example.

23

Poor sales practice

Possible

Minor

Bad relationship with clients. Decrease in profit. Bad image and reputation to AIA.

Manage - give sufficient training - motivation

24

Errors in premium or unit shares

Rare

Minor

Irritate the clients and cause losses to AIA.

Avoid Penalty can be given.

25

Execution Risk

Rare

Minor

Expenses occurred. Interruption and ineffective in daily operation process.

Manage Mentor can be placed in each branch temporarily to teach the staffs and agents about the new systems and policies.