The effect of risk management on the financial performance of private equity funds in Kenya

Abstract

This study sought to determine the effect of risk management on financial performance of private equity funds in Kenya. It is important to note that the private equity funds operating in Kenya are few but growing. The nature of private equity funds in Kenya is still very private with limited information on their operations available to the public. Risk management is a process activity with individual steps to be carried out in a specific order. Financial services across the globe take risk management as an important business process and necessary due to the different risk exposed to. The concept off risk and return has been addressed in previous studies in Kenyan private equity industry however one specific to risk management in that industry had to be carried out. The study took on a census research design with data collected being reviewed for accuracy, consistency, completeness and uniformity and arranged to enable coding and tabulation before final analysis. Both qualitative and quantitative analysis techniques were used. The study also used mutli linear regressions to best analyses the data. The study concludes that there is a positive relationship between risk management and financial performance in private equity funds. The firms concentrated on risk identification, measurement and monitoring as key steps in the risk management process with risk evaluation and mitigation actively engaged but not heavily concentrated on. It was clear that risk management carried out in the clear process effect financial performance of the firms. The study therefore suggests that further research be carried on private equity firms to determine other aspects affecting financial performance.