Risk mutualization

Risk represents the AXA Group's raw material. The insurance business involves taking on our customers' risks and "converting" them. There are different ways of doing this. The Group can take on the risks itself by diversifying them, which means pooling them together with other risks, or it can transfer them to outside organizations such as reinsurers or financial markets through a securitization approach.

Risk management, which applies to all of the Group's areas of activity - life, property and casualty, asset management - consists of managing these conversion processes. As such, risk management is about understanding and measuring risks more effectively in order to manage them in a controlled, responsible and profitable way over the long term, with a deliberate focus on sustainability, while facilitating this risk-taking.

In addition to this process, certain businesses which pose particularly sensitive environmental, social or ethical risks require an extra level of analysis.

Integration of Environmental, social, governance ("ESG") and ethical issues in risk management and product development

When appropriate or relevant, the Group's underwriters and portfolio managers integrate a number of emerging environmental and social risks, including human rights concerns, as well as more generally ethical concerns in their product development processes and policies. This is notably undertaken via the following initiatives:

  • The Group's Controversial weapons policy (2007) prohibits AXA from investing in a companies involved in the production of certain weapons (anti personnel landmines and cluster bombs). These weapons are banned by international conventions on human rights grounds. In 2011, the blacklisting was extended to other controversial weapons. See Responsible investment page for further information.
  • The Group's underwriting guidelines for P&C commercial lines requires local AXA entities to exclude certain sensitive sectors or activities, and to escalate eventual derogations to Group Corporate Responsibility level for further investigation.
    The AXA Group "Policy on business relationships involving sanctioned countries and countries identified as having high levels of corruption or political risk" formalises the Group's policies and procedures with respect to business in or with countries that are subject to international sanctions or embargoes or otherwise identified as high corruption, high political risk and/or tax haven jurisdictions.
  • AXA's reputation risk management framework and tools enable AXA to analyse and mitigate the risks posed by sensitive business sectors, both in terms of investments and insurance.

Emerging risks are screened by a specific team within AXA's Group Risk Management structure. These risks and AXA's response is detailed in the "Risk Factors" section of the Group's Annual Report.
In June 2013, AXA published its first PSI report, illustrating how the ESG criteria are being integrated into AXA's operational and business processes.