The Impact of Risk Management on the Profitability of Insurance Companies in Nigeria

Risk management should be at the core of all insurance companies‟ operations by integrating risk management practices into processes, systems and culture of the entire organization. The purpose of this study was to assess the impact of risk management on the profitability of insurance company. The study's specific objectives were: To study the extent insurance companies adopted risk management practices; “to examine the effect of risk management on the profitability of insurance companies”; “to critically determine challenges mitigating risk management practices in insurance firms” and “to study the extent insurance companies adopted risk management practices”. The research adopted a descriptive survey design. A total of 60 respondents who were selected through simple random sampling techniques participated in the study. Null hypotheses were tested using Simple Linear Regression, and Pearson Correlation coefficient, with Statistical Analysis System (SAS 9.2). Findings revealed that the financial risk management practices have impact on the profitability of insurance firm. The study established that operational risk management practices have positive influence on the profitability of insurance firm. The study also revealed that there is a significant relationship between strategic risk management practices and the profitability of insurance company. The study recommended that the management of insurance companies should set up savvy measures for convenient risk identification and viable risk relief in order to guarantee that their financial related execution is not affected contrarily.