then the firm could still realize benefits in terms of improved financial performance. This is a good thing for the firm as not all firms have the technical capacity to assess and measure the impact of risks facing the firm. Companies can anticipate potential losses and still be successful in their risk management efforts. However, if a company is able to assess and measure the impact of potential losses in advance, the measures put in place for mitigation will be more appropriate and the firm will derive more significant benefits from its risk management efforts. This essentially implies that organizations should adopt a comprehensive risk management framework in order to realize greater benefits from risk management. The study further established that adoption of risk management practices had a significant influence on the financial performance of Ghanaian insurance companies. This could be interpreted to mean that the firms that had a more comprehensive risk management program were more likely to remain financially stable for long and could be the firms that had been in operation for a long period of time. This finding is consistent with findings of a previous study by Ernst & Young (2012), whose results revealed that companies with more mature risk management practices tend to generate a higher growth in revenue. Similarly, the findings are consistent with the findings of a study by Aon Risk Solutions and Wharton School (2011), whose results revealed that there exists a positive relationship between the maturity of an organization’s risk management framework and its financial performance.
CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS SUMMARY This chapter presents a summary of findings, conclusion and recommendations of the study in line with the objectives of the study. The study sought to establish the relationship between risk management practices of Ghanaian insurance companies and their financial performance. The study found that most of the insurance companies registered in Ghana had been in operation for a long period of time with 75% of the companies having been in existence for over 10 years. 35% of the companies had a countrywide branch network of over 30 branches. Many of the companies had adopted the four risk management practices that were the focus of this study. Of the four risk management practices, risk identification was found to be the most significant in influencing financial performance with a unit increase in risk identification leading to a 0.668 increase in financial performance . This was followed closely by risk mitigation whose unit increase led to an increase of 0.454 in financial performance. A unit increase in risk management implementation and monitoring led to an increase of 0.398 in financial performance with risk assessment and measurement having the least influence on the company’s financial performance, at 0.348 increases in financial performance for a unit increase in risk assessment and measurement.
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- Spring '20
- Dr. ASRAVOR