Browsing by Author "Bisrat, Gugsa"

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    Assessment of Enterprise Risk Management Practices in the Ethiopian Insurance Sector
    (Addis Ababa University, 2018-06) Bisrat, Gugsa; Zewdie, Shibre (PhD)
    In a world full of uncertainties insurers around the globe are using risk management practice as a competitive advantage to stay ahead of their market. As a sector that provides insurance service for different risk exposures, the Ethiopian insurance sector has to benefit more from enterprise wide risk management. This research is an effort to reveal the current risk management practice prevailing in the Ethiopian insurance sector. Thus, the objective of this study is to assess the enterprise wide risk management practice in the Ethiopian insurance sector by identifying the nature, structure and objectives of the practice, review the risk management process in the sector, assessing the level of knowledge and the level of risk frequency, severity perceived for each risk along with insurers risk management ability to mitigate each risk. In addition the study seeks to understand the functions, benefits and challenges encountered in the practice. The study used a descriptive method of research where both primary & secondary data were used for analysis. A sample of eight insurance companies namely Ethiopian Insurance Corporations, Africa Insurance Company S.C, Nile Insurance Company S.C, The United Insurance Company S.C , Nib Insurance Company S.C, Abay Insurance Company S.C, Berhan Insurance Company S.C and Lucy Insurance Company S.C were selected from an entire population of 17 insurance companies in the sector using a probabilistic sampling technique known as stratified random sampling. Subsequently the study used questionnaire survey method to gather primary data from entire population of top, middle level management members of selected insurers as well as randomly selected first level management members while interview method was used for gathering primary data of board members’ views. In addition, secondary data such as financial statement and different National Bank publications were used to supplement the data collected from primary source. As a result it is found that the main function of risk management in the sector is compliance with standard rather than a strategic and competitive advantage. The study has identified a weakness in defining a clear risk appetite that is aligned with the organizations strategic objectives. The study also identified the lack of skill and experience specific to risk management in addition to the weakness over risk quantification phase of risk management practice of insurers. Thus, in order to make effective and efficient management decision based on risk adjusted returns the practice of risk management should be supported through continuous trainings, workshops and panel discussions that involve all staff members of insurers from different levels. Similarly risk management should be understood very well particularly by board of directors and top level managers who should implement ERM in a desired way for the desired purpose.