Journal of Management Information and Decision Sciences (Print ISSN: 1524-7252; Online ISSN: 1532-5806)


Financial risk management and performance of insurance companies: the moderating role of Hedge accounting

Author(s): Tapang, A.T., Takon, S.M., Uklala, A.P., Obo, E.B., Efiong, E.J., Ihendinihu, J.U., Anyingang, R.A., & Nkamare, S.E.

The study examined how hedge accounting moderates the relationship between financial risk management and the performance of insurance companies. The structural equation modelling approach was adopted using SMART PLS 3.3.3. The results revealed that financial risk management has a significant effect on performance while hedge accounting has no significant effect. The results further revealed that hedge accounting does not moderate the nexus of financial risk management and performance. The study concludes that insurance businesses should effectively manage their risk because risk management has been shown to have a favourable impact on financial success. The study also suggests that insurance company executives evaluate their risk management techniques on a regular basis to see if they are still applicable in the face of a rapidly changing operating environment. The study further suggests that insurance company executives review their risks' exposure to edit risk, bankruptcy risk, and interest rate sensitivity on a regular basis. Insurance businesses must improve their capital adequacy and operational efficiency in proportion to their size. Finally, the report suggests that insurance company executive’s implement risk management frameworks such as enterprise risk management that follow international best practices. As a result, insurance businesses will be able to meet international requirements and so become more international rivalry.

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