dc.description.abstract | Proper management of risks ensures that the financial earning capacity of a firm is
enhanced and guarantees future firm growth. Risk management techniques bring more
benefits than raise costs in financial institutions while cost are easily recognized and
recorded, benefits are more obscure. The objective of this study was to determine the
effects of financial risk management practices on financial performance of oil marketing
companies in Kenya. The study adopted a descriptive research design. The target
population for this study was the 23 oil marketing firms operating in Kenya as at June,
2014. These oil marketing companies were selected because of their involvement in the
role in oil marketing business both at local and international levels. All the 23 targeted oil
marketing companies had a representative office in Nairobi which made them more
accessible. The study used both primary and secondary data. The collected data was
thoroughly examined and checked for completeness and comprehensibility. Descriptive
statistics such as means, standard deviation and frequency distribution were used to
analyze the data. Data was coded and entered into the Statistical Package for Social
Sciences (SPSS) for analysis. On interest rate risk management, the study concluded that
the oil marketing companies in Kenya have interest rate management policy and that they
periodically review the interest rate policies. On foreign exchange risks management
practices, the study concludes that the oil marketing firms in Kenya have documented
foreign exchange rate management policy and that they maintain foreign currency
denominated accounts. On trading liquidity risk management practices, the study
concludes that oil marketing firms in Kenya have a well documented liquidity risk
management policy and that the policy is reviewed frequently as need arises. This study
therefore recommends that the management of the firms come up with management
policies that will address the variations in interest rates at different times. The study also
established that the firms have internal controls and independent audits. This study
recommends that the firms also conduct audits by external auditors. This study therefore
recommends that in order to deal with the fluctuating international oil prices, the firms
need to increase the use of financial derivatives in a bid to hedge their risks. | en_US |