Risk management practices and organizational performance in transportation companies

Abstract

This article explores how the transport companies operating in Enugu manage their risk exposures to improve their overall performance.The problem of the study is premised on the fact that loss exposures, if not correctly managed, could result in high losses for business entities both in terms of financial and market performance, effectiveness, efficiency and other performance areas.The objective of the study was therefore to assess the level of compliance with standard risk management adopted by these transport companies to ascertain how their management of loss exposures can be enhanced to reduce the occurrence and impact of these potential losses and mitigate their impact if they eventually occur.The independent variable in the study was the risk management practices of these companies.In contrast, the dependent variable was their performance, broken down into effectiveness, efficiency in service delivery, profitability, customer satisfaction and retention, growth, long-term survival, and their competitive advantage.The study adopted the survey method to generate qualitative data from respondents.The population of transport companies operating in Enugu is not quantifiable; therefore, the researcher selected ten companies, comprising both governmentsponsored and private companies.All the selected companies constituted the sample for the study.The study used primary data generated through the questionnaire instrument, and percentages were used in analysing the generated data.The study revealed that the risk management practices adopted by the selected companies enhanced their effectiveness and efficiency in service delivery by 90%; increased their profitability by 70%; increased their customer satisfaction and retention by 80%; encouraged their growth and long-term survival by 40%; and enhanced their company's competitive advantage by 70%.The challenges facing the selected companies in managing their risks include general ignorance of the importance of planned risk management practice (70%); inadequate support by the executive and management cadre (40%); poor funding of risk management activities (50%); and paucity of deliberate formulation and implementation of risk management policies (30%).The study concluded that risk management practice has significant implications for organisational performance and consequently recommends intensive enlightenment on the risk management function, executive support, and adequate funding for planned risk management practices, and deliberate policies on risk management.The implication of the study is to highlight that unless organisations plug the drain of their resources through effective risk management practices, revenues generated will still be drained through poorly-managed losses, ultimately giving rise to poor performance.