IMPACT OF CASH FLOW RISK MANAGEMENT ON THE FINANCIAL PERFORMANCE INDICATORS OF SELECTED INSURANCE COMPANIES IN LUSAKA, ZAMBIA

Abstract

This study investigates the influence of risk management practices on the financial performance of four prominent insurance firms operating in Zambia, namely Sanlam Life Insurance, Professional Insurance Corporation Zambia, ZSIC GI, and Prudential Insurance Zambia. The research focuses on assessing the impact of risk management strategies, including financial risk management, operational risk management, and enterprise risk management, on the financial outcomes of these insurance companies. Utilizing a comprehensive analysis of secondary data obtained from financial reports spanning the period from 2018 to 2022, the study employs statistical methods, including regression analysis and ANOVA, to elucidate the relationships between risk management variables and financial performance. The research objectives encompass a detailed examination of the factors influencing cash flow within the Zambian Insurance Sector, an investigation into the impacts of operational, liquidity, and enterprise risk management on the financial performance of the selected insurance companies, and the proposal of practical solutions for enhancing financial performance in the insurance industry. Preliminary findings from correlation analysis reveal both positive and negative associations between risk management variables and financial performance indicators. Subsequently, regression models are employed to quantify the strength and direction of these associations, shedding light on the nuanced dynamics between risk management practices and financial outcomes. The study contributes valuable insights into the specific risk factors that significantly affect the financial performance of insurance firms in Zambia, offering recommendations for strategic risk mitigation and financial planning. These findings are essential for industry practitioners, policymakers, and scholars seeking a deeper understanding of the interplay between risk management practices and financial stability within the Zambian insurance landscape. The results of this research aim to inform evidence-based decision-making and foster sustainable financial practices within the insurance sector.