| dc.description.abstract | Risk if not well managed could lead to collapse for most organisations especially those whose core business deals with day to day handling of risk. Risk management should, therefore, be at the core of an organization’s operations by integrating risk management practices into processes, systems and culture of the entire organization. This involves identifying and analysing risks, developing and implementing risk handling techniques and monitoring the progress of these in order to avoid and/or reduce the impact of risk on the financial performance of the firm. The objective of the study was to establish the effect of risk management practices adopted by Kenyan insurance companies on the financial performance of these companies. An exploratory research design was used for the study, with the target population being the 49 registered insurance companies in Kenya. The study used both primary and secondary data. Primary data was collected through questionnaires with 44 insurance companies giving a response. Secondary data was collected by use of desk search techniques from published reports as well as data from financial statements maintained by IRA for a period of five years from 2008 to 2012. Content analysis was used to analyse qualitative data while the quantitative data was analysed using SPSS. Regression analysis was also used in the study. The results were presented using tables and charts. The study established that a majority of insurance companies in Kenya had adopted risk management practices in their operations and that this had a strong effect on their financial performance. Risk identification was found to be the most significant in influencing financial performance, followed by risk mitigation, risk management program implementation & monitoring and risk assessment & measurement respectively. This study concludes that there is a positive relationship between the adoption of risk management practices and the financial performance of insurance companies in Kenya. The study recommends that insurance companies in Kenya should adopt a multifaceted approach to risk management in order to derive greater benefits from their risk management efforts. Further, Kenyan insurance companies should follow current international leading practice by adopting Enterprise Risk Management (ERM) which incorporates other insurance risk quantification models. This will ensure that the companies remain afloat during such times of strict regulatory regimes such as solvency 11 and Basel | en_US |
