Quantitative Market Risk Exposure Assessment: MARSH & MCLENNAN COMPANIES, INC.

This report synthesizes the company’s market risk disclosures from the 10-Q filing dated March 31, 2026, providing a structured assessment of exposure across key financial risks.

Interest Rate Sensitivity

Exposure Magnitude and Characteristics

The Company is exposed to interest rate fluctuations primarily through its cash investments and fiduciary capacity holdings. As of March 31, 2026, the total balances subject to variable interest rates were $1,611 million (Cash) and $11,744 million (Fiduciary Cash), totaling approximately $13.35 billion.

Quantitative Sensitivity

The disclosure provides a clear sensitivity measure: if short-term interest rates increased or decreased by 10% or 30 basis points for the year, annual interest income would change by approximately $30 million. Furthermore, changes in these rates affect assumptions used to calculate net periodic pension cost.

Mitigation and Management Strategies

The Company employs a strict Board-approved investment policy that mandates the preservation of principal and liquidity, requiring broad diversification with counter-party limits based on credit rating. The majority of fiduciary cash investments are held in bank or short-term time deposits and liquid money market funds.

Assessment:

• Strength: The company demonstrates strong control over its cash portfolio through a formal investment policy and clear quantitative sensitivity metrics ($30 million impact).
• Weakness: While the risk is quantified, the disclosure does not detail specific duration matching or active hedging instruments (e.g., interest rate swaps) used to neutralize systemic rate movements beyond general diversification.

Foreign Currency Exposure

Exposure Magnitude and Characteristics

The Company has significant foreign currency exposure, with non-U.S. based revenue constituting approximately 51% of total revenue across roughly 80 foreign currencies. The translated values of international revenues and expenses are subject to exchange rate fluctuations.

Quantitative Sensitivity (Stress Testing)

A major stress test reveals a substantial potential impact: if the exchange rates of four major currencies (Euro, British Pound, Australian dollar, and Canadian dollar) moved 10% in the same direction against the U.S. dollar while remaining constant over the year, full-year net operating income would increase or decrease by approximately $123 million. Additionally, holding current rates constant for the remainder of 2026 is estimated to increase full-year net operating income by approximately $82 million due to conversion effects.

Mitigation and Management Strategies

The Company utilizes forward contracts and options periodically to limit foreign currency exchange rate exposure on specific, clearly defined transactions in its ordinary course of business. The company notes that risk is often mitigated under normal circumstances because both the foreign currency revenue and expense are frequently denominated in the functional currency of the foreign location.

Assessment:

• Strength: The Company actively uses hedging instruments (forward contracts and options) for specific transactions, and internal operational structures help mitigate translation risk when revenues and expenses match local currencies.
• Weakness: The magnitude of potential loss ($123 million under a 10% stress scenario) is significant, indicating that the current mitigation strategies may not fully insulate net operating income from large, simultaneous movements in multiple major foreign exchange rates.

Commodity Price Risk

Exposure Magnitude and Characteristics

The provided market risk disclosures do not mention any specific exposure to commodity price fluctuations (e.g., oil, natural gas).

Assessment:

• Observation: Based solely on the text provided, there is no disclosed quantitative or qualitative exposure to commodity price risk.

Equity Price Risk

Exposure Magnitude and Characteristics

The Company holds diverse equity investments subject to market value decline:

1. Investments in private equity funds and public/private companies accounted for using the equity method total approximately $324 million.
2. Investments valued at readily determinable fair values amount to $26 million.
3. Investments without readily determinable fair values are approximately $16 million.

Mitigation and Management Strategies

The risk of decline in market value, which could lead to realized impairment losses, is managed by periodically reviewing the carrying value of these investments to determine if valuation adjustments are appropriate under applicable accounting pronouncements.

Assessment:

• Strength: The Company maintains a rigorous internal review process for investment valuations and adheres to relevant accounting standards regarding potential impairments.
• Weakness: The disclosure focuses on accounting treatment (impairment testing) rather than active risk management or hedging strategies designed to protect the carrying value of these investments against market volatility.

Quantitative Measures Summary

The Company provides specific quantitative measures for two key risks:

• Interest Rate Risk: Quantified sensitivity of annual interest income ($30 million change per 10% rate shift/30 bps change).
• Foreign Currency Risk: Detailed stress test results quantifying the potential impact on net operating income ($123 million under a major currency 10% movement scenario).

The disclosure does not provide specific figures for Value-at-Risk (VaR) or detailed sensitivity tables for equity price risk.