The Effect of Risk Management Practices on Performance of Firms in the Hospitality Industry in Nairobi County, Kenya
Abstract
The project research finds out the effect of risk management practices on the financial
performance of firms in the hospitality industry in Nairobi county Kenya. The objective
of the study is to assess the effect of the risk management practices on the performance of
firms in the hospitality industry in Kenya. This study will be significant to tourism firms,
general public, students and the government as it will offer valuable contributions from
both a theoretical and practical perspective. Theoretically, it will contribute to the general
understanding of risk management practices and their effect on organizational
performance. There are critical issues and challenges affecting Kenya's competitiveness
and sustainability as tourist destination. Hospitality industry in Kenya has had difficult
times over the years, particularly a prolonged period of lackluster performance in the
1990s. A post-election period of civil unrest in 2008 and the global economic crisis in
2009 only made inbound international tourism business more challenging. Then in the
recent past is the threat of terrorism in which Kenya has lost both its citizens and the
tourists to the Al-shabab from Somalia. The study found that risk assessment, risk
response, innovation and quality had positive significant effects while internal
environment and control activities had positive significant effects on the financial
performance of firms in the hospitality industry in Nairobi County. Overall risk
management practices accounted for almost all of the variance in financial performance
of the firms. Thus, the study concludes that the risk management practices influence the
financial performance of firms in the hospitality industry to a very large extent. The study
recommends that firms in the hospitality industry in Kenya should employ robust risk
management practices as these are likely to influence their financial performance in one
way or another, improve on their financial performance, they should focus more on
improving how they assess their internal environment and work on control activities as
these are likely to enhance financial performance of these firms
Publisher
University of Nairobi