Risk Management Practices and Financial Performance of Sacco’s in Kisii County

Authors

  • Nyamwaya Dancan Mosioma
    Msc Student, Jomo Kenyatta University of Agriculture and Technology
  • Dr. Linet Amenya
    Jomo Kenyatta University of Agriculture and Technology

Abstract

Purpose: The study aimed to assess the effects of risk management practices on the financial performance of Savings and Credit Cooperative Organizations (SACCOs) in Kisii County, Kenya.


Material/methods: The study was grounded in Agency Theory, Stakeholder Theory, and Resource-Based Theory to explain the dynamics influencing organizational risk and performance. A descriptive research design was employed. The target population comprised 400 respondents from SACCOs operating in Kisii County. Using simple random sampling, a sample size of 40 respondents was selected. Both primary and secondary data were collected. Data analysis included descriptive and inferential statistics to determine the relationship between risk management practices and financial performance.


Findings: The study found that risk identification and risk mitigation practices had a positive and statistically significant effect on the financial performance of SACCOs. These practices were instrumental in enhancing financial stability and operational resilience.


Conclusion: The study concludes that effective and integrated risk management practices are vital for improving the financial performance and long-term sustainability of SACCOs.


Value: This research contributes to the understanding of risk governance in the cooperative financial sector. It offers actionable recommendations for SACCOs, including the institutionalization of risk management, staff capacity building, and adoption of technology to strengthen risk governance frameworks.