Risk Management Strategies and Corporate Governance in Insurance Companies in Kenya

Abstract

Management of risk forms part of the core business of insurance companies. However the relationship between risk management and corporate governance in insurance companies in Kenya has not been explored. The objective of this study was to determine the effects of risk management strategies on corporate governance in insurance companies in Kenya. The study used a descriptive research design as it entailed survey and fact finding inquiry and also had considerable capacity to generate answers to questions like what, who, where and how. The population under investigation was the insurance industry comprised of 53 companies at the time of collecting data. A sample of 42 insurance companies was used, out of which data was collected from 38 companies. Primary data was employed in this study. Standardized questionnaires containing both open ended and close-ended questions were administered and the data collected analysed using descriptive statistics as it was quantitative. The results and findings of the data analysed were presented in tables and charts. The study finds that insurance companies in Kenya have incorporated risk management strategies which include risk avoidance, risk acceptance, risk reduction and risk transfer through a rigorous risk assessment process which involves risk identification, risk evaluation, risk treatment and risk monitoring in their corporate governance strategies. The study concludes that there is a strong connection between risk management strategies and corporate governance of insurance firms in Kenya. However challenges remain occasioned by decisions made by national regulators such as Insurance Regulatory Authority, Competition Authority and Capital Markets Authority on the introduction of their own specific market requirements, and global disagreements on the modalities of implementing supervision that is risk-based. The study recommends that the challenges require insurance companies to execute versatile approaches in their risk management efforts.