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 companies’ financial performance, at 0.348 increases in financial performance for a unit increase in risk assessment and measurement. Generally, from the results of this study, adoption of risk management practices was found to have a significant influence on the financial performance of insurance companies, as explained by an R2 of 71.6%. This implies that better risk management by companies leads to improved financial performance.
Conclusion Most of the insurance companies in Ghana are large companies with a wide branch network throughout the country in order to take services closer to their customers and hence enhance market share in the face of growing competition. Owing to their large sizes, it can be concluded that these companies are faced with greater risks and hence the need to manage risk appropriately. A large number of these companies had put in place measures to spearhead risk management and this could explain why most of these companies had continued to be in operation for a long duration of time, with 61% of them having been in existence for over 20 years. It can be inferred that the companies that had existed for a long time had more mature risk management programs which had contributed to their financial sustainability over the years.
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- Spring '20
- Dr. ASRAVOR