Effect of Internal Environment and Risk Assessment Component of ERM on the Performance of Insurance Companies in Nigeria: Moderating Role of Risk Management Information System

Abstract

This study examines the effect of internal environment and risk assessment component of ERM on the performance of insurance companies in Nigeria and the role of risk management information system as a moderator in the relationship. This research employs a quantitative methodology and focuses on the areas of Lagos and Abuja. The target group for this study consists of the top management personnel in insurance companies. By utilising a census sampling method, the study collected data from a total of 66 participants representing insurance companies in Lagos and Abuja. To examine the proposed relationships, this study utilised Smart-PLS 4, a tool for Structural Equation Modelling. The findings indicate that the performance of insurance companies is positively influenced by both the internal environment and risk assessment. Furthermore, the presence of a risk management information system enhances the connection between the internal environment, risk assessment, and insurance company performance. This research underscores the significance of prioritising the internal environment and risk assessment components of Enterprise Risk Management (ERM) as a highly effective business strategy for addressing risks that can jeopardize business performance. To our knowledge, this study represents one of the initial endeavours to establish a correlation between the internal environment and risk assessment components of ERM and the performance of insurance companies in Nigeria. There is a limited amount of research that has investigated the moderating role of a risk management information system, particularly in developing countries such as Nigeria. Insurance companies should strive to strike a balance between utilising the RMIS for risk assessment and maintaining a robust and independent risk assessment process. This can involve regular evaluation and validation of the RMIS outputs, ensuring data accuracy and quality, and providing ongoing training and support to employees to ensure effective utilization of the system.