Influence of Risk Management Practices on the Financial Performance of Investment Firms Trading at the NSE

Norris Kibe Muhia, Agnes Ogada and Jane Muriithi

International Journal of Economics and Finance, 2025, vol. 17, issue 3, 106

Abstract: This study aims to investigate the influence of risk management practices on the performance of investment firms in Kenya, specifically focusing on the role of risk management practices on the performance of investment firms trading at the Nairobi Securities Exchange. This study used a correlational research methodology and positivist philosophy to investigate how firm-specific characteristics affected the financial performance of 63 investment businesses listed between 2014 and 2023 on the Nairobi Securities Exchange (NSE). Using a census technique, data was gathered from secondary sources such as NSE, CBK, and KNBS. Statistical analysis methods such as SPSS were used to display the results. The findings indicated that risk management strategies positively impact financial performance, with significant effects on ROA, ROE, and composite performance measures, highlighting the critical role of robust risk management in enhancing the economic performance of investment firms trading at NSE. Based on the study findings, investment firms should develop comprehensive risk management frameworks that effectively identify, assess and mitigate potential risks.

Date: 2025
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