Evaluation of the Level of Enterprise Risk Management Adoption and Maturity of Insurance Companies in Kenya

Abstract

Purpose: The purpose of this study was to evaluate the extent to which insurance companies in Kenya have adopted ERM process, and then to assess the maturity, challenges and strategies in the implementation of this process.Materials and methods: The research design adopted for the study is descriptive research. The researcher conducted a survey on the 49 insurance companies of Kenya to encapsulate the factors that are relevant in articulating the extent of adoption of ERM and the level of maturity. A sample of 196 respondents was selected from a population of 245 respondents. The study used quantitative and qualitative methods of data analysis. Statistical Package for Social Sciences (SPSS) version 20 program was used for analysis. The results were presented using tables and pie charts. Similarly, qualitative data was summarized and categorized according to common themes and presentedin continuous prose form.Results: The study concluded that organizational related challenges hindered implementation of ERM programs. Results revealed that inadequate application of the risk management framework, ambiguity in roles and responsibilities in risk management, complexities in risk measurement, lack of embodiment of ERM in organizational culture, difficulty in risk quantification, linking risk information to strategic decision making, ensuring that all decisions remain within the organization’s risk tolerance, proactively identifying current and emerging risks, cost and budgetary constraints, misalignment of the risk and business operating models, risk management not seen as a priority by top management and inadequate information to make risk-based decisions hindered implementation of ERM frameworks among insurance firms in Kenya. The findings imply that organization related challenges have a significant effect on ERM implementation.Recommendations: The study recommends that there should be better organizational strategies to help improve implementation of ERM programs. It was found that building a strong risk culture, engaging consultants, building a dedicated ERM function, committed board of directors and top management, developing risk appetite statement, appointment of a Chief Risk Officer (CRO) and availing ERM budgets improved the implementation of ERM programs. Key words: enterprise risk management, adoption, maturity

Evaluation of Risk Management Practices in Information Systems Project in the Public Sector

“…It is argued that although top management support encourages RM practices, low risk awareness might result in low perceived usefulness of RM among lower management Evaluation of Risk Management Practices in Information Systems Project in the Public Sector staff, particularly the project team. This finding is in line with findings by Njagi and Njuguna (2017) and Altuntas, Berry-Stolzle and Hoyt (2011).…”

“…These models also offer a benchmarking guide specifically meant to identify weak points in RM maturity and allow improvement of RM practices (Andersen & Jessen 2003). However, this study only focused on the first three dimensions; it excluded the Application Dimension as it focused on the use of risk management systems, which is beyond the scope of this study (Njagi & Njuguna 2017;Zhao, Hwang & Low 2014). The RMMM also provides a systematic approach for assessing different maturity dimension levels in risk management.…”

“…This was raised by E3, "I agree with assigning people in charge of RM, but [we] must know what the Terms of Reference (TOR) are and clarify role definitions." Njagi and Njuguna (2017) stated that RM maturity and practices will increase if roles and responsibilities are clearly defined. Similarly, E2 also emphasized the importance of having personnel or units that understand how to properly implement the RM process: "You can have very good processes and better methodology, but finally [it is] the human [who] will do the work.…”