Responsible Governance

MetLife operates under the Three Lines of Defense model. Each colleague has a role to play in risk management under the Company’s risk and control framework. The lines of business and corporate functions are the first and primary line of defense in identifying, measuring, monitoring, managing and reporting risks. Global Risk Management forms the second line of defense, providing strategic advisory services and effective challenge and oversight to the business and corporate functions in the first line of defense. Internal Audit serves as the third line of defense, providing independent assurance and testing over the risk and control environment and related processes and controls.

The Finance and Risk Committee of the Board of Directors oversees the assessment, management and mitigation of material risks, as well as capital and liquidity management practices. Other Board of Directors committees also have significant risk management oversight responsibilities:

• Audit: Policies and internal controls regarding information security and cybersecurity, and relevant legal and regulatory compliance;
• Governance and Corporate Responsibility: Management succession, culture and reputation, as well as policies and positions regarding significant sustainability matters;
• Investment: Investment portfolio risks; and
• Compensation: Incentive compensation program risks (e.g., avoiding incentives to take excessive risk).

The Board oversees the Company’s sustainability matters, strategy and execution, including the assessment and management of various sustainability opportunities, priorities and risks. MetLife’s management provides regular updates to the Board and its committees on various sustainability matters. For more information on the Board’s committees and risk management oversight, please refer to Board Committee Information and Board of Directors.

In addition to oversight by the Board and its committees, MetLife has a management-level risk oversight structure. Material risks are within the purview of multiple senior management committees. MetLife’s Enterprise Risk Committee, a senior management-level committee, oversees the identification, measurement and management of material risks on an enterprise basis.

Managing Climate Risks

Climate risks, both physical and transition risks, could impact MetLife’s business operations, investments, customers and supply chain. Climate change may increase the frequency and severity of short-, medium- or long-term weather-related disasters, public health incidents, wildfires, rising sea levels and pandemics, and their effects may increase over time. Changes in policy, regulation, technology or market behaviors in response to climate change may harm the value of investments we hold or harm our counterparties, including reinsurers, or increase our compliance costs. Our regulators may also increasingly focus their examinations on our management of climate-related risks.

We consider how MetLife could be impacted by climate risks across the business, both assets and liabilities, by evaluating how risks could manifest across risk types, including: credit, market, insurance, operational, legal and compliance risks. We have conducted qualitative climate risk identification exercises to determine potential climate risks for key parts of the organization. In addition, we have reviewed our organizational structure to identify roles and responsibilities in relation to climate risk management across the three lines of defense.

MetLife continues to explore quantitative assessment and scenario analysis methods for our investments to advance our understanding of climate risks and the potential impacts on our business, strategy and financial planning. While climate risk modeling is still a nascent field with many limitations, we continue to experiment with various approaches.

We also stay up to date on climate risk-related policy trends and evolving regulatory requirements globally through engagement with policymakers and industry groups.