SIZE AND OWNERSHIP AS DETERMINANTS OF OPERATIONAL RISK MANAGEMENT IN THE NIGERIAN INSURANCE INDUSTRY

Abstract

Operational risk management (ORM) is the ongoing management of risks brought on by human behaviour, internal systems, processes, and events outside of one's control. Increase in the intensity of performed financial operations, globalization and rapidly changing technologies have enhanced operational risks. The insurance industry is required by regulatory requirements to manage operational risks. The purpose of this study is to explore the relationship of size and ownership as determinants of operational risk management in the Nigerian insurance industry. A quantitative approach was adopted using survey design in collecting data through a structured questionnaire. Sample population is the insurance companies in Nigeria. Stratified sampling was utilized in selecting the sample size of 20 insurance companies. Respondents are employees within the management cadre and risk management department drawn from the 7,036 employees of the selected companies. The data was empirically examined by use of descriptive statistics and inferential analysis. Generalized linear model (GLM) was employed in testing the hypotheses. The findings suggest that size is not a determinant while ownership type is a determinant of the practice of ORM in the Nigerian insurance industry. The findings of the study have an importance to the regulatory authorities in assessing its supervisory role and insurance companies. Further research exploring the relationship between the factors of ORM practice, and the value ORM contributes to the insurance industry.