Risk management

From environmental to economic and information security risks – we’re risk ready

As a large asset manager and insurer, proactively identifying, measuring and managing risk is fundamental to our business. A risk management mindset helps us meet our financial commitments to Clients. At the same time, it protects our competitiveness and long-term sustainability.

Our approach

A detailed discussion of our approach to risk management is in our Annual Report. The information below focuses on risk management as it relates to environmental and social risks.

Sun Life has a Risk Management Framework (RMF) that spans all areas and geographies of our organization. The RMF is a comprehensive set of protocols and programs for conducting our business activities. It helps us ensure we apply a consistent approach to managing risk exposures across Sun Life. Exposures include but aren’t limited to environmental and social risks.

Our Risk Appetite Policy is integral to our approach. It outlines specific constraints that define the total level of risk that Sun Life is willing to accept.

Our risk culture relates to how we behave and respond, in addition to the requirements we set as an organization. It’s also about the way we behave and respond to risks. We need to consider risk in everything we do.

We have a Risk Culture Statement supported by principles designed to embed a strong, unified culture throughout Sun Life. These principles include:

  • Tone from the top
  • Transparency
  • Effective challenge and communication
  • Incentives and accountability

We encourage discussions on risk decisions and urge employees to speak up about potential concerns.

Everyone at Sun Life is responsible for recognizing and managing risks when making business decisions. Our mandatory training program helps employees spot, minimize and report risks that could affect our business. This training covers topics such as:

  • Code of conduct
  • Safety and emergency preparedness  
  • Business continuity
  • Financial crime awareness
  • Data privacy and information protection

Our three lines of defence model outlines specific duties related to risks, oversight and reporting.

One of the ways we assess risk and the effectiveness of our internal controls is through scenario testing. Scenario testing is a risk management technique that includes stress testing, reverse stress, and sensitivity testing. These exercises help us analyze Sun Life’s resilience under extreme circumstances. Those include a severe economic shock, health pandemic, cyber breach, extreme weather event and more. Our business continuity plans consider various situations under which a disruption may occur. Every year, we update our business continuity plans to integrate evolving risks and our scenario analysis findings.

Climate change is one of the most serious and complex risks facing society today. It is one of Sun Life’s risks, which we manage within our overall RMF.

We continue working to better understand potential climate-related risks and to improve our resilience against them. These risks include:

  • Physical risk: risks related to physical impacts of climate change, including extreme or chronic weather events.
  • Transition risk: risks related to the transition to a lower-carbon economy. This includes policy, legal, technology and market changes to address the need to reduce and adapt to climate change.

Our approach to addressing climate change risk also involves strengthening our ability to evaluate and report on potential impacts. We provide climate disclosures guided by the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). These disclosures help investors and other stakeholders assess how Sun Life is tackling potential climate-related impacts on our business.

Climate change is one of several environmental and social risks we’re monitoring and responding to across our business. Others include cyber threats, issues of inequality and public health issues.

Learn more:

2021 highlights

  • 97% of employees completed risk-related training
  • Sun Life’s financial strength ratings continue to be among the highest in the industry 

Learn more about our progress and performance in our 2021 Sustainability Report and ESG Performance Tables.