Risk Management Strategies and Organizational Performance of Deposit-Taking SACCOs in Kiambu County, Kenya
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Date
2025-08
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Kenyatta University
Abstract
Deposit Taking Saccos performance in the County of Kiambu is essential for long-term provision of guaranteed services to its membership while also supporting the governments Vision 2030 and growth of gross domestic product. However, an analysis of a three years organizational performance of DT-SACCOs revealed decline in deposits, gross loans and total assets. The focus of this research was to investigate the effect of risk management strategies on organizational performance of DT-SACCOs in Kiambu County. The study intended to determine the effect of risk avoidance, risk reduction, risk transfer and risk retention strategies on the organizational performance of DT Saccos in Kiambu County. Resource-based view, balanced scorecard, contingency and enterprise risk management theories guided the study. Research design for the study was explanatory and descriptive. The unit of observation was all 14 DT-SACCOs in Kiambu County while the unit of analysis consisted of all 126 heads of department from 14 DT-SACCOs Based on the small number of DT-SACCOs in Kiambu County, a census study was used. Semi-structured questionnaire was utilized for data collection. Nairobi City County is where the Pilot Study was done involving two DT-SACCOs with 12 respondents. Content, face and construct validity determined validity of the instrument. Cronbach alpha with a cut-off point of 0.7 to enable reliability analysis. Descriptive statistics and inferential analysis aided in data analysis. Ethical consideration such as anonymity, voluntary participation and consent was considered in the research. The risk avoidance (β=0.0311, p=0.002), risk reduction strategy (β=0.0405, p=0.003), risk transfer strategy (β=0.0297, p=0.002) and risk retention strategy (β=0.0506, p=0.004) were found to have a positive significant impact on the success of DT-SACCOs in the County of Kiambu, Kenya. The study concludes that a risk avoidance strategy streamlines processes and implements best practices leading to improved operational efficiency, reducing costs and enhancing service delivery to members. A strong risk reduction strategy demonstrates a commitment to safeguarding members' investments which strengthen trust and loyalty among members, resulting in higher retention rates and attracting new members. Risk transfer strategy enable DT-SACCOs to maintain a more stable financial position which is crucial for building trust among members and attracting new clients, ultimately leading to increased deposits and lending activities and retaining risk enable the DT-SACCOs to develop a deeper understanding of their risk profiles, allowing for more informed decision-making and better management of financial resources. The study recommends that it is necessary to conduct comprehensive risk assessments to identify potential vulnerabilities within the DT-SACCOs. The deposit taking Saccos should adopt advanced technology solutions that can significantly improve risk management through the use of data analytics and risk management software to monitor financial health, assess creditworthiness, and detect fraudulent activities in real time. Deposit taking Saccos can enhance their risk transfer strategies by diversifying their investment portfolios and collaborating with insurance companies can provide DT SACCOs with tailored insurance products that cover specific risks and the DT-SACCOs should focus on educating members about financial management and risk awareness can enhance their understanding of the cooperative's operations.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration (Strategic Management) of Kenyatta University, August 2025.
Supervisor
1. Dr. Anne Muchemi