Operational risks management practices at the jubilee insurance company of Kenya ltd.
Operational risk, broadly speaking, is the risk of loss from an operational failure. It encompasses a wide range of events and actions as well as inactions and includes, for example, inadvertent execution errors, system failures, acts of nature, conscious violations of policy, law and regulation, and direct and indirect acts of excessive risk taking. Jubilee Insurance, just like any other Insurance company writes policies that deal with specific risks, and in some cases, even underwrite exotic risks. As a direct corollary, therefore, insurance companies should be good at managing their own risks. However the truth is a little far from that! In this study, I have examined the operational risks inherent at the Jubilee Insurance‟s business, how they are managed and the challenges experienced in their management. The findings based on the analysis of interviews with six senior staff reveals that although the Company has an elaborate risk management policy, many of its operational risks among them fraud, employee infidelity, processing errors, people and skills attrition and product misspelling remain a challenge. The company‟s risk management policy is supported by risk manuals and checklists which are developed through consultative process and is administered by the Risk & Compliance Manager. The major challenges facing the management of operational risks are the mutating nature of fraud risks, loss of key staff to competition and lengthy process of system acquisition. Today it is well recognized that sound management of an insurer and other financial sector entities is dependent on how well the various risks including operational risks are managed across the organization. The management of Jubilee Insurance therefore faced with the challenge of managing operational risks as established by the findings of this study.