CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Risk is an ingredient of all human life. How best to live with, is a problem for every individual and indeed every corporate body for a long time around, men has so urgent ways of controlling the risk elements to which individual, as private or public or as commercial and business ventures as exposed. Until about 25 years ago, the idea of risk management was thought of a subject and as a result of distaste. On the part of corporate and individual insurance buyers will gross inadequate premium rebate, given by insurance underwriters, to compensate for higher risk retention and loss prevention techniques being adopted for their insured risks.

Before looking at the meaning of “risk management” it will be curtail to briefly appreciate and examine the concept of risk “W.J” willet defined risk as objectified uncertaintly regarding undesirable events. Also by L.J meldrum defined risk as “the protection of assets, earning, liabilities and people of an enterprise with maximum efficient and at minimum cost.

Risk management can be defined as the process or transfer mechanism of identification, evaluation and earning of business or other enterprise with the minimum cost and maximum efficiency in a paper presented by “Insurance Training Centre” Ogere Ogun State in April, 1987 titled scope of risk management extend beyond mere handling of Insurable risk; it does encompassed, the management of all types of risk. Risk management is concerned with formally some forms of defensive strategy, which takes account of organizational assets and objectives.

This pieces of work will critically examine the various mechanism employed by corporate body in the assessment of risk. This will include;

A.  process of identification

B.  evaluation

C.  monitoring and controlling of such risk

The identification of risk will include information on the proposal from which reveals the physical and moral hazards of the subject matter of insurance. The identified risk which threatens a corperateassests. The monitoring and control of risks highlight the physical and financial control of risks that theaters assets. The centre pieces of this work will be to thoroughly analyze various means of identifying corporate objectives. These will include retention, reduction and transfer of risk. Also, taking steps pre loss and post loss objectives and the procedure for transfer and reduction of loss.

The entire work price will be comprehensively packaged by ascertaining various hazard and inherent liabilities present at the risk and makes recommendations based on experts. Opinion to enable underwrite to decide whether the risk offered is acceptable at standard rate or otherwise finally, I will also suggest ways and means for prudent risk management in respect with those risk that corporate bodies in an entity is faced with and bring about reduction to loss exposure.

1.2     STATEMENT OF THE PROBLEM

The following problems led to this research work:

1.  There are so many problems facing the insurance practitioners which have been preventing them from playing their roles in risk management in Nigeria.

2.  In the past, poor risk management has ruined Nigerians insurance industries.

3.  There has been daring escapades on the part of risk managers in performing their duties in the past.

1.3     OBJECTIVE OF THE STUDY

1. To evaluate ways in which risk can be managed?

2.  To recommend ways by which the insurance practitioners and risk managers can surmount the many constrains facing them and play a very important role in risk management in Nigeria.

3.  To examine and determine the contributions of insurance practitioners and risk management in the control of risk in Nigeria.

1.4 RESEARCH QUESTION

1. Does risk management implementation mitigate the effect of the crisis on performance of insurance companies?

2. Does the implementation of risk management lead to better performance?

3. Do insurance firms with a higher level of risk management implementation perform better than insurance firms with a lower level of risk management implementation?

4.  What are the problems facing the insurance practitioners which have been preventing them from playing their roles in risk management in Nigeria?

1.5        Hypotheses.

H1: Performance in the insurance industry level has been worse during the financial crisis.

H2: Insurance companies having higher levels of ERM implementation perform better than insurance companies with lower levels of ERM implementation.

H3: A higher level of ERM implementation mitigates the effects of a financial crisis on performance of insurance companies.

1.6 SIGNIFICANCE OF THE STUDY

This research work will be of immense help to:

The student: it will help the researcher to know more on risk management as an efficient means of achieving corporate objectives.

The Stake holders: this study will be of great importance to stake holders as it will enrich their knowledge on the various risks in insurance firms and industries and also their effects.

Insurance company: this will equally be of help to the insurance companies and financial institutions in Nigeria because when they abide by the recommendations provided by the researcher it will help them in time of decision making.

The country at large: this study will be of great importance to the country Nigeria as it will help the policy makers to prorogate laws that will help improve risk management in the country. 

1.7     SCOPE AND LIMITATIONS OF THE STUDY

Scope refers to the dimension of coverage of this work. This research work restricted to few selected insurance firms in Enugu metropolis. The information gathered will be used as reference to other insurance firms within the state and also the federation.

In carrying out this research work, the researcher was faced with certain problem which includes;

i.            Time: Time constraints, as a student trying to keep up with lectures and at the same time running around for the collection of necessary information for completion of this research work.

ii.     finances; collecting data from different sources cost a lot of money; from internet subscription to transportation to libraries. This posed a certain limitation on the research work      

1.8 ORGANIZATION OF WORK

The purpose of this study is to study the concept of risk management as an efficient means of achieving corporate objectives. Chapter 2 included an overview of the literature and research related to enterprise risk management. Chapter 3 described the methods utilized to conduct the study. Chapter 4 presented the results and findings of the study. Chapter 5 presented the conclusions of the study and discussed the implications of the findings for institutional leaders.