High Level Risk Considerations Relating to the Russian Invasion of Ukraine


The Society of Actuaries in Ireland (“Society”) is a member association of the Actuarial Association of Europe (“AAE”). The Society supports the statement of solidarity issued by the AAE in relation to the Russian invasion of Ukraine.

While we hope that this invasion is resolved in as peaceful a way as possible, we have to plan for the worst. Many companies will have set up committees to monitor the progress of the crisis and the potential impact it will have on their business in the short and long term. This short note provides a high-level view of the issues such a committee might include within its scope, although the relevance of these issues to each company will depend on the business it writes.

Asset Exposures

Actual exposure to investments in countries involved

  • Monitor exposure to assets in Russia / Ukraine
  • Consider other countries that are linked to the conflict (e.g. Belarus) or could become involved in the conflict (e.g. Moldova)
  • Nature of the exposure, is it general account or for the account of policyholders
  • What stance does the company take on holding Russian assets (e.g. sale if even possible)

Wider impacts on assets held

  • Monitor companies that have significant exposure to Russia (e.g. Raiffeisen Bank)
  • Monitor sectors that are exposed to the conflict, energy is the obvious sector but other sectors will be sensitive
  • Monitor commodity markets that are exposed to Russia and Ukraine

Liquidity of Funds

  • The liquidity of some markets / assets will dry up
  • Some unit linked funds may have to be suspended

Exposures to counterparties, such as

  • Banks
  • Exchanges and clearing houses
  • Reinsurers

Broader Financial / market considerations

Consider the following factors when modelling adverse scenarios

  • Higher inflation
  • Rates rise
  • Shape of yield curve (flat or even inverted)
  • Equity market level shocks
  • Equity markets volatility (realised and implied)
  • Property market shock
  • Credit spreads widen
  • Defaults increase
  • Credit rating migration downwards

Metrics to be modelled in the scenarios

  • Solvency positions
  • Profitability measures
  • Liquidity

What realistic actions can be taken now to mitigate the impact on solvency/profitability / liquidity? Is an ad hoc ORSA required?

Insurance & Other Risks

  • Insurance claims will depend upon what countries and business lines the business operates in
  • Policyholder behaviour, again depends on what countries and business lines the business operates in
  • Expenses increase with inflation
  • Impact on new business

Operational Risks

  • Cyber risk
    • Different forms of potential attack
    • Resilience to attack
    • Back up and disaster recovery
    • Cyber insurance may not apply due to war exclusions
  • Third-party risk
    • Third parties may have operations in Russia or Ukraine or nearshored critical resources there.
    • Third parties could have subcontracted to suppliers with operations in Russia or Ukraine
    • Suppliers with Russian connections
    • Reputational as well as operational risks to be considered
    • Business continuity of counterparties, e.g. banks
  • Compliance risk
    • Compliance with sanctions
    • Keeping up to date with rapidly changing sanctions
  • Physical damage / Infrastructure Issues
    • Employees in physical danger
    • Physical damage to premises
    • Evaluate ability to transfer people, systems & processes to safe locations
    • Disruption to power supply, internet or other critical infrastructure (either directly or indirectly e.g., due to dependence on Russian energy supply)
  • Other operational risks that may be heightened as a consequence of the Russian invasion
    • Legal and data privacy
    • Financial crime
    • Strategy
    • Reputational
  • Opportunity cost of firms/society not being able to implement other plans due to the war e.g. responding to climate change crisis

Human Resources

  • Safety of employees impacted directly by conflict
  • Sensitive to colleagues who are indirectly impacted by the conflict
  • Impact on European labour markets
  • Impact on staff wellbeing/morale generally


The views of this article do not necessarily reflect the views of the Society of Actuaries in Ireland, the ERM Committee, or the author’s employer.