Effect of Risk Management Practices on Financial Performance of Dairy Cooperative Societies in Meru County, Kenya

Abstract

Risk management practices are one of the most important and challenging issues in performance of Dairy Societies in Kenya. Making sure Dairy Cooperative Societies develop, manage and implement a risk management system is essential in streamlining the societies operations and minimizing unnecessary financial leakages due to the effects of various risks. Lack of a homegrown and internally developed risk management system that suits the operations of the societies hampers the financial performance of Dairy Coo perative Societies. T he study was restricted to investigating the effect of risk management practices on the performance of Dairy Cooperative Societies in Meru County, Kenya. T he specific objective of the study was to establish the effect of risk management practices on the financial performance of Dairy Cooperative Societies. The study resorted to a census of all the 72 Secretary Managers of the Dairy Cooperative Societies in Meru County, whereas data was collected using a questionnaire. The descriptive research design was adopted for this study. T he response rate was 88.88 per cent, while the coefficient of determination indicated that the independent variable contributed to 67.9 per cent of the variability in financial performance of Dairy Cooperative Societies as explained by R2. After running the regression model it was established that the p-value and regression coefficients generated was as (β = 0.521 p =0.042). This indicated that risk management practices had a positive and significant effect on financial performance of Dairy Cooperative Societies in Meru County, Kenya.