Relationship between risk management practices and financial performance of sasra regulated saccos in Nairobi

Abstract

Risk management framework is important for SACCOs and other money lending institutions in Kenya. In conjunction with the underlying frameworks, basic risk management process that is generally accepted is the practice of identifying, analyzing, measuring, and defining the desired risk level through risk control and risk transfer. Active risk management can decrease the probability of default as well as lower the cost in case of distress. SASRA is granted specific powers in law to deal with SACCOs societies that fail to comply. This study therefore sought to determine the impact of risk management techniques on financial performance of regulated SACCO’s institutions in Nairobi. The study adopted correlation research design in which quantity data was collected and analysed in order to describe the specific phenomenon in its current trends, current events and linkages between different factors at the current time. The study population consisted of all 154 SACCO registered under the SASRA in Kenya. The SASRA regulated SACCOs were selected through simple random sampling method. The study used both primary and secondary data. Primary data information was obtained from the field using semi-structured questionnaires through drop and pick method. Secondary data was collected from the financial statements of the SASRA regulated SACCOs books to collect information on annual earnings. The study used qualitative and quantitative techniques in analyzing the data. Inferential statistic was used to establish the relationship between risk management practices and the financial performance of SACCOs, performance of SACCOs which was measured by management efficiency.From the findings, the study established that there are risk management