FINANCIAL RISK MANAGEMENT PRACTICES AND PERFORMANCE OF INSURANCE COMPANIES IN KISII COUNTY, KENYA

Abstract

Risk management should be at the core of an organization’s operations by integrating risk management practices into processes, methods and culture of the organization.  This involves four major strategies which are risk mitigation, risk assessment, risk identification, and risk communication. The aim of the research was to identify the financial risk management practices enforced by Kenyan insurance companies on the performance of these companies. The study adopted a descriptive research design. The target population was the ten registered insurance companies in Kisii county, Kenya. Primary data was used for the purposes of the study, and primary data was collected through questionnaires with ten insurance companies giving a response.  Content analysis was used to analyze qualitative data. Regression analysis was used in the fulfillment of this study. The results were presented by use of tables and charts. The study established that a majority of insurance companies in Kisii county, Kenya had adopted risk management practices in their operations and that this had a strong effect on their financial performance. Risk mitigation was found to be the most significant in influencing financial performance, followed by risk assessment, risk management program implementation & identification respectively. This study concluded and indicated that a positive relationship between the adoption of risk management strategies and the financial performance of insurance companies in Kisii County, Kenya is evident. The study recommends that insurance company management implement effective risk mitigation strategies to maintain consistent financial performance. Consequently, risk reduction is a crucial element in maintaining the stability of a company's financial performance. The study advises that the management of insurance businesses should consistently assess the applicability of their risk management techniques in light of an ever-evolving operational landscape. Information technology should be enhanced in risk management by implementing information systems pertinent to risk assessment and measurement to evaluate the efficacy of risk management programs.

Key Words: Risk Mitigation, Risk Assessment, Risk Identification, Risk Communication

CITATION: Onkundi , G. M., & Miroga, J. (2025). Financial risk management practices and performance of insurance companies in Kisii County, Kenya. The Strategic Journal of Business & Change Management, 12 (2), 727 – 741.  http://dx.doi.org/10.61426/sjbcm.v12i2.3238