Lunar International College
Department of Finance and Investment
Financial Market and Institution Assignment 2
Assessment of risk management practice of insurance companies in Ethiopia: a critical
review
By: Tesfaye Belay Aynalem (ID: GSR/0579/13)
Submitted to: Andualem Ufo (Dr.)
April, 2021
Addis Ababa, Ethiopia
Assessment of risk management practice of insurance companies in Ethiopia: a critical
review
In this paper, I am going to review the research done by (Hiwot, 2017) with the title of
“Assessment of risk management practice of insurance companies in Ethiopia”. The main
objectives of the study were to assess the practice of objective setting, risk assessment, risk
response, and risk identification, and to determine the approaches that insurance companies in
Ethiopia. The objectives of this study are not measurable and it was better to include in the
objective identify the challenges facing risk management practice.
The researcher used a descriptive quantitative research design. But in my opinion, to address the
objectives of the study it was better to use a mixed approach (qualitative and quantitative
research) because the assessment of risk management practice needs to include the opinion,
knowledge, and attitude of the managers and staffs of insurance companies for example
(Nigussie, 2019) uses both methods. The researcher used purposive sampling techniques to
select the respondents of the research. Data was collected using only close-ended questionnaires.
The findings of this research were better if the researcher included open-ended questionnaires
and secondary data like (Ameneshewa, 2019). On the other hand, the researcher analyzed the
collected data using descriptive statistical methods like mean, standard deviation, and narrative
methods.
The finding of this research indicated that insurance companies in Ethiopia have risk
management practice in terms of setting risk-related objectives and risk identification, risk
assessment, risk response and risk control, communication, and monitoring. The researcher
concluded that the insurance companies in Ethiopia have a moderate extent to practice risk
management. The study point out the insurances should give attention to providing information
to their employees as well as to their customers through a different mechanism to maintain
effective risk management practice. If we look at the finding of this research it is not specific and
clear. The researcher concluded that five risk management techniques (setting risk-related
objectives and risk identification, risk assessment, risk response, and risk control,
communication, and monitoring) are practiced in Ethiopia but this finding is not clear and is also
difficult to apply. Therefore it would be good for the researcher to explore some of the common
risk management strategies in Ethiopia and their effectiveness. On the other hand, the researcher
showed that insurance companies in Ethiopia have a moderate extent of the practice of risk
management. Again this conclusion is not clear because the word moderate is unmeasurable.
In general, the idea raised by the researcher was very important because the way of risk
management practices are very important for the success of insurance companies. But objectives
stated by the researcher are not clear and measurable. The research methodologies (research
design, sampling, data collection, and presentations) designed to address the research objectives
are not completed. Finally, the findings and the recommendations of the research are not clear
and are difficult to apply in the insurance companies.
References
Ameneshewa, T. (2019). Risk Management and Financial Performance in the insurance
Business The Case of Ethiopian Insurance Corporation. Addis Ababa University.
Hiwot, T. (2017). Assessment of risk management practice of insurance companies in Ethiopia.
St. Mary’s University.
Nigussie, D. T. (2019). A study on risk management practices and challenges on public building
construction projects in Bahir Dar. Bahir Dar University.
