EFFECT OF RISK MANAGEMENT STRATEGIES ON FINANCIAL PERFORMANCE OF INSURANCE COMPANIES IN NAIROBI COUNTY, KENYA

Abstract

This stud aimed at investigating the effect of risk management strategies on financial performance of insurance companies in Nairobi County, Kenya. The specific research objectives were to establish how risk transfer affect financial performance of insurance companies in Nairobi County, Kenya.To determine how risk acceptance affect financial performance of insurance companies in Nairobi County, Kenya. To examine how risk avoidance, affect financial performance of insurance companies in Nairobi County, Kenya and to determine how risk response and planning affect financial performance of insurance companies in Nairobi County, Kenya. The study is significant because it drawn attention to some crucial concerns and offer instructions on essential elements that strategic position and process in accordance with business strategy with regard to risk management of insurance companies in attempts to improve the aspect of performance. The study used a descriptive survey methodology in which management of insurance companies who was chosen using Krejci and Morgan's (2018) technique, was given open-ended questionnaires. From this, a sample of 86 respondents was obtained. Data was gathered, examined, and conclusions drawn. The information displayed in tables using descriptive statistics. The study used a multiple regression model to analyze how the various variables relate to one another. The study provided specific recommendations for insurance companies to enhance their risk management practices. This included suggestions for refining existing strategies, adopting new technologies, or improving internal processes. The majority of respondents believe in the significant impact of risk transfer on the performance of insurance companies, with a clear distinction between those who support and those who do not support this perspective. The data indicates that a significant majority of respondents (84%) believe that risk transfer affects the performance of insurance companies, while a smaller minority (16%) do not share this belief. This suggests a prevalent perception that risk transfer plays a crucial role in the performance of insurance companies. Given the strong majority opinion, insurance companies should prioritize and refine their risk transfer strategies to enhance performance. This could involve more effective use of insurance, diversification of risk portfolios, and innovative risk management solutions.