ADOPTED BY THE RISK MANAGEMENT PRACTICES

NILE INSURANCE COMPANY

(A CASE STUDY OF DEBRE BRHAN BRANCH)

RESEARCH PAPER PREPARED IN PARTIAL

FULFILLMENT OF THE REQUIREMENT FOR BA
DEGREE IN BANKING AND FINANCE

PREPARED BY: ASRATIE FEKYIBELU

ADVISOR: Dr. SUJATHA SELVARAJ

JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF BANKING AND FINANCE

, 2013
JIMMA, ETHIOPIA
 Abstract

The research will be conducted in Dbre Brhan branches of Nile insurance company by
considering the risk management practice of insurance companies, which are providing insurance
service to the society. The main objective of this study is to know the risk management practice
of Nile insurance by taking Debre Brhan branch as a case area. For the purpose of the study,
primary data are collected through questionnaire and interview and secondary data are collected
from the document of the institution. Together the relevant information from the respondents
random sampling techniques are used. The qualitative data is processed and analyzed in
descriptive manner and the quantitative data is organized in table form and accomplish with
relevant information.
 Acknowledgment

Firs and for most, I would like to express my heart full gratitude to my friend, Brahnu magnets
who give financial support to prepare this proposal.
Secondary, I would like to express my deepest gratitude to my advisor, Dr, Sujatha Selvaraj for
her invaluable support, adviser and constructive comment in preparation of this proposal.

Finally, I would like to thank, Zelalem A. the secretary of banking and Finance for typing this
research proposal.

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 Table of content
Abstract .......................................................................................................................I
Acknowledgement................................................................................................................II
Table content ......................................................................................................................III
Chapter One
1. Introduction.......................................................................................................................1
1.1 Background of the study .............................................................................................1
1.2 Statement of the problem ..........................................................................................2
1.3 Objective of the study .................................................................................................3
1.3.1 General objective....................................................................................................3
1.3.2 Specific objective ...................................................................................................3
1.4 Significance of the study .............................................................................................4
1.5 Scope of the study .......................................................................................................4
Chapter Two
2. Literature Review .........................................................................................................5
2.1 Risk .......................................................................................................................5
2.1.1 Definition of risk ..................................................................................................5
2.1.2 Classification of risk ............................................................................................5
2.1.3 Classification of pure risk ....................................................................................6
2.1.4 Burden of risks on society ....................................................................................6
2.2 Risk management risk ................................................................................................7
2.3 Objective of risk management ...................................................................................7
2.4 The risk management process ...................................................................................8
Chapter Three
3. Methodology................................................................................................................18
3.1 Location of the study area ......................................................................................18
3.2 Source of the data ..................................................................................................18
3.3 Method of data collection .....................................................................................18
3.4 Sampling technique.................................................................................................19
3.5 Sampling of the population and sampling size ......................................................19

III
 3.6 Method of data analysis and presentation ..............................................................19
Chapter Four
4.
4.1
4.2
Chapter Five

Reference ......................................................................................................................22
Appendix ......................................................................................................................23

IV
1
 Chapter One
1. Introduction
1.1 Background Of The Study
Risk management has been practiced informally since the down of time prehistoric humans
bended together in tribes to conserve resources. Share responsibilities and provide some
protection against the uncertainties of life. Even today, informal management is practiced by
almost every ones, whether they are conscious of it or not. Even today risk management
practices continues to involve specific duties and function vary widely among risk manager
largely, because, the significance of specific categories of risk varies substantially across
organization. For example, insures related to legal liabilities are likely to be of small relative
importance for a financial service organization such as lending institution (c. Arthur Williams
jar, Etal, 1998).

Risk, which is uncertainty regarding loss passes a problem to business and individuals in nearly
every walk of like. Executives, employees, investors, students, house holders, farmers, and
travelers all confront risk and deal with it in various ways. If a loss is certainly occur, it may be
planned in advance and treated as deflate. But when there is uncertainty about the occurrence of
loss that is risk becomes an important problem. The risk surrounding potential loss creates
significance economic burdens for business, government, and individuals. Risk may also deprive
society, seems judged to be risky. Therefore special department called, risk management is very
important to handle potential accidental exposure especially pure risk (Trierschrtann, 1998)

All business face the threat of loss that may not occur proper risk management enables an
insurance company to handle its exposures to accidental losses in the most economic and
effective way most of the time it is very hard to insurance company managing risk that are comes
from catastrophic risk and natural disaster it is hard to know the real occurrence of risk, to
measure and also the customers honesty to the risk to occur (www.nberiorg/chapter/c795opdf).

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1.2 Back ground of the organization
Nile insurance company was established on 11 th of April 1995 with subscribed capital of
Birr 12 million and currently the capital of the company is raised to birr 100 million it is legal
business entity registered with the licensing super using body o the national bank of Ethiopia in
accordance with reclamation No 86/1994 and license No 006/95.
It is one of the orders private insurance company entering in to the industry serving more than
nearly 16 years with diligent and professional experience committing it self to excellence.
Currently, the number of its share holders has reached 101.

(Nile Insurance Company profile, p.1)

1.3 Statement Of The Problem

Accidental loss in each day threats the survival of some business interrupt either operation or
sow their growth worry about possibility may stop the business from engaging in a certain
activities. Proper risk management enable the business to handle its exposure to accidental loss
in the most economic. Risk management contributes to survival and profitability.

That is why the researcher would initiate to conduct study on the selected topic. For better
investigation of the problem the following research question would be answered by the
researcher.
 What kind of risk is mostly occurring in the company?
 What is the reason for the occurrence of the loss?
 Which steps should the risk manager follow in managing risk?
 How fear and unforeseen risk should be reduced?

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1.4 Objective Of The Study
1.4.1 General Objective

As a general objective of the study was expressed that, what are the risk management practices
of Nile Insurance Company? In Debre Brhan Branch.

1.4.2 Specific Objective Of The Study

Under the above general objective there are some specific objectives which help to achieve the
general objective are:-
 To understand the kind of risks mostly occurring in the company?
 To identify the reason for the occurrence of the loss
 To determine the steps used by the company risk manager?
 To know, how fear and unforeseen risk should be reduced, by the company.

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1.5 Significance Of The Study
Study on the risk management has some benefit for Nile insurance company in Debre Brhan
town. Some of them are
It help to understand easily important risk handling techniques and also it can help the company
to know it’s activity in managing risk.

In addition to the above, these case study may serve as a secondary data or stepping stone for the
future recognition or researchers who want to conduct research on relating topic and, it may help
the researcher to get BA degree in Banking and Finance as a partial fulfillment irrespective of
it’s huge value in providing the first hand experience in area of research.

1.6 Scope/Delimitation Of The Study

The study, paper focused on the risk management practice of Nile insurance Company in Debre
Brahn town. Hence the study does not include other branches of Nile insurance company due to
financial and time constraint.

1.7 Limitation of the study

This research consider on the risk management practice of insurance companies. How ever, in
the process of understanding this research, there are certain constraints which limit the quality of
the research.
 Difficulties to access all the available information.
 In adequacy of time scheduled for data collection.
 In sufficient finance to collect the data.

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 Chapter Two
2. Literature Review
2.1 Risk
2.1.1 Meaning Of Risk
Risk is condition in which there is possibility of an adverse deviation from a desired out- come
that is expected or hoped for. Risk is uncertainty regarding loss. /George E.Rejda, 1998, p.s).

It is the probability or treat of damage, injury, liability or other negative occurrence that is caused
by external or internal vulnerabilities and that may be neutralized through preemptive action. It is
possibility of suffering harm or loss, damage.

2.1.2 Classification Of Risks

Risk may be classified in many ways. The major categories are:

1. Financial/Non financial risk-the term risk is includes all situations in which there is an
exposure to adversity. In some cases these adversity involves financial loss, while in
others it doesn’t there is some element of risk in every aspects of any human Endeavour
and many of the risks have no financial consequence.
(Student material, prepared by Jimma University, 2004).
2. Static /Dynamic risks – dynamic risks are these resulting from change in the economy.
Static risks involve those losses that would occur even if there were no changes in the
economy.
(Student material, prepared by Jimma University, 2004).
3. Fundamental/Particular risk- Fundamental risks is a risk that affects the entire economy
or large number of person in the economy. Particular risk is a risk that affects a only
individuals and not entire community. There may be static or dynamic. /Gerge
E.Rejda,1998,p.s)
4. Objective /Subjective risk – objective risk is defined as the relative variation of actual
from expected loss. Subjective risk is defined as uncertainty based on persons mental

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 condition or state of mind. Subjective risk may affects decision when the decision maker
is interpreting objective risk. (Gerge E.Rejda,1998,p.5)

5. Pure/Speculative risk- Pure risks defined as a situation in which there are only the
possibilities of loss or no loss. Pure risk exists when there is no chance of gain.
Speculation risk is defined as a situation in which either profit or loss is possible it exists
when there s chance of gain as well as chance of loss.
(George E.Rejda,1998,p.5)

2.1.3 Classification Of Pure Risk

The major types of pure risk that can be create great financial insecurity include, personal risk,
property risk, and liability risk. (George E.Rejda, 1998,p.8)
1. Personal risks - are risks that consist of the possibility of loss of the ability to earn
income. Three are there major personal risks. Those are risk premature death, risk of
sufficient income and risk of pure health.
(George E.Rejda,1998,p.8)
2. Property risk- anyone who owns property faces property risk, simply because such
property can be stolen /destroyed.
(George E.Rejda,1998,p.10)
3. Liability risk- the basic peril in liability risk is the intentional injury of other person or
damage their property through, negligence or carelessness, However liability may also
result from international injuries or damages.
(George E.Rejda,1998,p.10)

2.1.4 Burden Of Risks On Society

Risk entitles three major burdens on society
1. The size of an emergency fund must be increased.
2. Worry and fear
Society is deprived of certain goods and services / George E. Rejda, 1998.p.11)

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2.2 RISK MANAGEMENT
2.2.1 Definition
Risk management defined as systematic process of identification and evaluation of pure loss
exposure faced by an organization or individuals and for the selection and implementation of the
most appropriate technique for treating exposure. Its scientific accidental losses designing and
implementations procedures that minimize the occurrence of loss or the financial impacts of the
loss that is occurred. Risk management focuses on parts of total dandling of risks, those that are
classified as “pure risks”. As a general rule the risk management focuses only with the
management of pure risk, not specialized risk. All pure risks are considered, including that are an
insurable hence risk management is the identification, measurement and treatment of property.
Liability and personal pare risk exposure. (George E.Rejda, 1998, p.40).

2.2.2 Objective Of Risk Management

Risk management has several important objectives that can be classified in to two categories.
Normally pre loss objective and post loss objective. /George E.Rejda, 1998, p- 41)

Pre loss objective: prior to the occurrence of the loss the most important objective includes
economy in scale, the reduction of anxiety, and meeting externally imposed obligation. The first
goal refers that the firm should prepare for potential loss in most economic way possible. These
involve analysis of safety program expenses, insurance premium, and costs associated with the
difference techniques for handling losses. The second objective refers the reduction of anxiety is
more complicated, certain loss exposure can cause greater worry and fear for the manager’s key
executives, and stock holders than other exposure . However the risk management wants to
minimize the anxiety and fear associated with all loss exposure. The third objective must meet
any externally imposed obligation. This means the firm mast meet certain obligation imposed on
it by outsider. (George E.Rejda, 1998, p.41)

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 Post loss objective-The most important post loss objective include, survival of the firm, to
continue operation, stability of earning, continued growth of the firm and goal of social
responsibility.
The first and most important post loss objective is revival of the firm. Survival means that after a
loss occurs, the firm can at least resume partial operation within some responsible time period if
the choose to do.

The second post loss objective is to continue operating. For some firms, the ability to operate
after a severe loss is an extremely important objective.
The third post loss objective is stability of earnings. This objective is closely related to the
objective of continued operations. The forth post loss objective is contended growth of the firm.
A firm may grow by developing new products and markets or by acquisition and merger.
Finally, the goal of social responsibility is to minimize the impact that a loss has on other persons
and on society. (George E.Rejda, 1998, p.41)

2.2.3 The Risk Management Process

In order to have effective risk management program, the risk management must take certain
steps. There are four steps in risk management process.
1. Identify potential loss
2. Evaluating the potential loss
3. Implementing and administering the program
4. Selecting appropriate technique or combination of techniques for treating loss exposure. /
George E.Rejda, 1995,p42)
1. Identifying Potential Loss- is the first step in risk management process .It is to identifying
all pure loss exposure. Risk identification is the process by which a systematically an
continuously identifies properties, liabilities and personal exposure as soon as or before it emerge
or exist unless the risk manager identifies all the potential losses confronting the firm, he /she
will not have any opportunity to determine the best way to handle the undiscovered risks. The
business will unconsciously retain this risks and this may not be the best or even a good to do.

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Risk identification is every difficult process, because a risk manager has looked in to all
operation of the company, so as to identify where exact risk emanate from. The risk manager has
to recognize exposure to loss that is he/she must first of all be aware of possibilities of each types
of loss. This is fundamental duty that must precede all other function to reduce the possibilities
of overlooking important risks. Most risk managers use some systematic approach to the problem
of risk identifications. Those are mentioned as follow:-

A. Insurance policy check list provide a list of all varieties of policies or types of insurance that
may needed by a business. Insurance policy check list can be sourced from insurance companies
and other publishes.

B. Loss exposure check list providing list of common risk exposure of affirm an exposure check
list is a very simple yet effective tool for risk identification.
Loss exposure check list available from various sources such as insurances agencies and risk
management associations. These check list contains possible sources of loss to the business firm
from distraction of physical and tangible assets.(George E.Rejda, 1998, P 42)
C. Risk analysis questionnaire – aim at identifying the risk faced by an organization. Serious of
well structured and well formulated questions are put to respondent. This answer indicates
risk areas and specific risks. ( George E.Rejda, 1998, p 42)
D. Flow charts- is schematic representation of sequential process. A flow depicting the
operation of the firm can guide the manager to risk associated with those operation ( George.
E.Reja, 1998, P 42).
E. The best method – no single method or procedure of risk identification is free from weakness
or can be called fool proof. The strategy management must be to employee that method the
best fits the situation at hand these choices is the functions of
i. The nature of business
ii. The size of the business
iii. The availability of in house expertise.

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2. Evaluating The Potential Loss -after the risk manager has identified the various types of
potential losses faced by him/her. These exposures must be measured in order to determine their
relative importance and to obtain information that will help the manager to decide up on the most
desirable combination of risk management tools. Evaluating and measuring the impact of losses
on the firm involves an estimation of the potential frequency and severity of loss. Information is
needed concerning to domination of each exposure.
A. The loss or no loss that will occur
B. The severity of losses.
A. Loss frequency refers to the probable number of losses that may occur during a given time
period. (George E.Rejda,1998,P.42)
B. Loss severity refers to the probable size of loss that may occurred both loss severity and loss
frequency data are needed to evaluate the relative importance of an exposures to loss depends
mostly up on the potential loss severity not the potential frequency. In determine loss severity
the risk manager must be carefully include all types of loss that might occur as a result of a given
event as well as their ultimate final impact up on the firm often while the less important types of
losses is obvious to the risk manager. The more important types are much more difficult to
identify loss severity and loss frequency data do more than identifying the important losses they
are also extremely useful in determining the best to handle an exposure to losses. (George E.
Rejda, 1998,P.44)

Priority ranking based on severity as mentioned earlier. The more sever the losses due to risks
the higher the rank. As the relative severity of loses differs not all losses warrant equal attention.
Some are to be given priority over others other losses in the same category need not be
prioritized as each of them will lead to the same consequences. For example financial
catastrophe that can lead to bankruptcy can be due to liability losses, flood or include fire losses.
Since the net result is the same irrespective of the outcomes. There is no need to risk then under
such circumstance, classification of risks into their leads, critical, important and unimportant it
seems more appropriate

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  Critical risks include those exposures to loss where the magnitude of losses could lead
to bankruptcy.
 Important risks include those exposures in which the possible losses would be lead top
bank raptly but would require that individual or firm to borrow in order to operation.
 Unimportant risk includes that exposure in which the possible losses could be meat
out of the existing asset or current income without imposing undue financial stream.

3. Selecting Appropriate Technique. The major techniques for treating loss exposure are
the following risk control techniques.

A. Avoidance
B. Loss control
C. Retention
D. Non insurance transfer
E. Insurance
Avoidance and loss control are called risk control techniques because they attempt to reduce the
frequency and severity of accidental losses to the firm. Retention, none insurance transfer and
insurance are called risk financing techniques. (George E.Rejda, 1998, P.44).
A. Avoidance
Avoidance means that a certain loss exposure is never occurred, or an existing loss exposure is
abandoned. For example, affirm can avoid a flood by not building a plant in a flood plain area.
An existing loss exposure they also be abandoned. For example a pharmaceutical firm that
produces a drug with dangerous side effect may stop in manufacturing that drug.
The major advantage of avoidance is that the chance of loss is reduced to zero, if the loss
exposure is not occurred. In addition, if an existing loss exposure is abandoned the possibility of
loss is either eliminated or reduced because the activity or products that could produced has been
abandoned.
Avoidance, however, has two disadvantages. First it may not be possible to avoid all losses. For
example, accompany cannot avoid the premature death of a key executive .Second, it may not be
practical or feasible to avoid the exposure.

11
For example a paint factory can avoid losses arising from the production of paint. However,
without any paint production, the firm will not be in business.(George E.Rejda, 1998 p. 44)

B. loss control

Loss control is another method of handing loss in risk management program. Loss control
activities are redesigned to reduce both the frequency and severity of losses. Unlike the
avoidance technique loss control deals with an exposure that the firm does not wish to abandon.
The purpose of loss control activities is to change the characteristics of the exposure, so that it is
more acceptable to the firm, the firm wishes to keep the exposure but wants to reduce the
frequency and severity loss. (Georger, E. Rejda, 1998.P44)
C. Retention
Retention is another important technique for handling losses. Retention means that the firm
retain part of all of the losses that result from a given loss exposure. Retention can be effectively
uses in a risk management program with three conditions exist.
1. No other method of treatment is available
2. the worst possible loss is not possible
3. losses are highly predictable ( George E.Rejda, 1998, P.45)

 Self Insurance: is a special form of planed retention by which part or all of a

given loss exposure is retains by the firm. A better name for self insurance is self funding,
which expresses more clearly the idea that loss are funded and paid by the firm. Self
insurance is also used by employers to provide group health, dental, vision and
prescription drug benefit to employees. Firms often insure their group health insurance
benefits because they can save money and control heath care costs. Finally self insured
plans are typically protected by some types of stop loss insurance that limit the employers
out of pocket costs once loss exceed certain limit. (George E. Rejda, 1998,p. 46)
D. None Insurance Transfer

None insurance transfers are other insurance methods by which a pure risk and its potential
financial consequences are transferred to another party. Naturalization or hedging and hold
harmless agreements are example of none insurance transfer of risk.

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Neutralization Or Hedging – It describe actions where by a possible gain is balanced against a
possible loss. Neutralization is a process of balancing a chance of loss against chance of loss
against chance of gain. For example, a person whose has bet that a certain team will win the
world cup may neutralize the risk involved by also placing a bet on opposing team in other
words he/she the risk to the person who accept the second bet. A commercial example of
naturalization is handling raw material price or by express that would affects by changes in
foreign exchange rates. The nature hedging it to take who take simultaneous position that offered
each so matter what the outcome is of some event based on chance, the hedger neither wines not
loss. Because there is no chance of gain associated with pure risk neutralization or hedging is not
a tool of pure risk management.
(C.Arthur Williams, 1981,p.1998)
Hold Harmless Agreements- are contract entered prior to a loss, in which one party agrees to
assume a second party responsible for a loss. For example contractors may require
subcontractors to provide contractor with liability protection, they are sued because of the
subcontractor activities. Likewise, venders request hold harmless agreements before selling
manufacturer goods.
(C.Arthur Williams, 1981,p.1997)

E. Insurance
Commercial insurance is also used in risk management program. From the risk manager’s view
point, insurance represent contractual transfer OF risk is appropriate for loss exposures that allow
probability of loss but the severity of loss is high. If the risk manager used insurance it treats
certain loss exposure. Five key are factors to be emphasized. They are as follows.
 Selection of insurance coverage
 Selection of an insurer
 Negotiation of terms
 Dissemination of information concerning insurance coverage.
 Periodic review of insurance program.
(George E.Rejda, 1998, p.48)
First the risk manager must select the insurance coverage needed, since there may not be enough
money in the risk management budget to insurance all possible losses, the need for insurance
divided in to several categories depending upon their importance, one can classify in to three
categories.

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 1. Essential insurance
2. Desirable insurance
3. Available insurance
(George E.Rejda, 1998, p.48)

1. Essential Insurance
Includes those coverage required by low or by contract, such as workers compensation
insurance. Essential insurance also includes those coverage that will prefect the firm against
catastrophic loss or a loss that threatens the firms survival, commercial general liability
insurance should fall in to that category.

2. Desirable Insurance
Is protection against loss that may cause the firm financially difficult, but not bankruptcy.

3. Available Insurance

It is coverage for slight loss that would merely inconvenience the firm.
(George E.Rejda, 1998, p.48-49).

The risk manager also determine if detectable is needed and the size of the deductible. A
deductible is a provision by which specified amount of is subtracted from the loss payment
otherwise payable. A deductible is used to eliminate small claim and the administrative expense
of adjusting this elimination. As a result, substantial premium spellings are possible. In essence,
a deductible is a form of risk retention.

Most risk management program combine the retention technique with commercial insurance. In
determining the size of the deductible, the firm may decide to retain only a relatively small part
of the maximum possible loss.
Another approach is to purchase excess insurance. A firm may be financially strong and may
wish to retain a relatively larger proportion of the maximum possible loss. Under an excess
insurance plan, the insurer does not participate in the loss unit unless the actual lose exceed the
amount of affirm has decided to retain.
Second the risk manager must selects, an insurer or several insurers based on several important
factors. These include the financial strength of the insurer, and the ability to pay cost and term

14
of protection. The insurer financial strength is determined by the size of policy owner surplus,
underwriting, and the quality of management.

The risk manager must also consider the availability of risk management service in selecting
particular insurer and insurance agent or broker can provide the desired information concerning
the risk management services available from different insurance This service include loss control
service, assistance in identifying loss exposures and claim adjustment service. The cost and
terms of insurance must also be considered, all other factors being equal, the risk manager would
perfect to purchase insurance at a lowest possible price. (George E.Rejda, 1998, p49).

Third, after the insurer or insurers are selected, the term of the insurance contract must be
negotiated. If printed policies endowments and forms are used the risk manager and the insurer
must agree on the document that will form the base of the contract. If a special tailored
manuscript policy is written for the firm, the language and meaning of the contractual provision
must be clearly stated in the contract.
Finally, if the firm is large, the premium may be negotiable between the firm and the insurer. In
many cases an agent or broker will be involved in the negotiation. (George E. Rejda, 1998, p.49)

In addition, information concerning insurance coverage must be disseminated to other in the

firm. The firm employee and managers must be informed about the insurance coverage, the
various records that the insurer will provide, and the change in hazards that could result in
assessing of insurance. The person responsible for reporting a loss must also be informed. The
firm must comply with policy provision concerning how a notice of acclaim is to be given and
how the necessary profits of loss are to be presented. (George E. Rejda, 1998, p.50)

Finally, the insurance program must be periodically reviewed. The entire process of obtaining
insurance must be evaluated periodically. These involves an analysis of agent and broker
relationship, coverage needed cost of insurance, quality of loss control service provided,
whether claim are paid promptly, and numerous other factor. Even the basic decision, whether to
purchase insurance must be reviewed periodically. (George E. Rejda, 1998, p.50)

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Which Method Should Be Used?

In determining the appropriate technique or method for handling loss, a matrix can be used that
classifies the various loss exposures according to frequency and severity. The matrix can be use
full in determining which risk management method should be used.
Risk Management Matrix

Types of loss Loss frequency Loss severity Appropriate risk management

1 Low Low Retention
2 high low Loss control and retention
3 low high Insurance
4 High High Avoidance

(George E.Rejda, 1998,p49).

4. Implementing and Administrating The Risk Management Program
This is the fourth step in risk management program. Risk management policy statement,
cooperation with other department and periodic review and evaluation of risk are part of these
step.
Risk Management Policy Statement
A risk management policy statement is necessary in order to have an effective risk management
program. These statements outline the risk management objective of the firm. As well as
company policy with respect to treatment of loss exposure. It also educate top level executives in
regard to the risk management process, gives the risk manager greater authority in the firm, and
provides standards for judging the risk managers performance.
(George E.Rejda, 1998, p51).

Cooperation With Other Department

16
This risk manager does not work alone, other functional department within the firm are
extremely important in identifying pure loss exposures. These department can cooperate in the
risk management process with, accounting, finance, marketing, production and personnel
departments. (George E.Rejda, 1998, p51).

Periodic Review And Evaluation

To be effective the risk management program must be periodically reviewed and evaluated to
determine if the objective are being attained or not. In particular risk management costs, safety
programs and loss prevention program must be carefully monitored.
Loss record must also be examined to detect and change in frequency and severity. In addition,
new development that affect the original decision on handling a loss exposure must be examined.
Finally the risk manager must determine if the firms overall risk management policies are being
carried out and if the risk manager is receiving the total cooperation of the other departments in
carrying out the risk management function.
(George E.Rejda, 1998, p52).

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 Chapter Three
3. Methodology
3.1 Location of The Study Area

The study will be conducted in Nile insurance company which is found in Debre Brhan town.
To know the risk management practice of Nile insurance company in the town, called Debre
Brhan starting from October to May 2005 E.C

3.2 Source of Data

The source of the data for this study can be obtained from both primary and secondary source of
information. This is the primary data that are collect from the customer, the employee and the
manager of the company, and the secondary data are to be obtained from the previous record of
the insurance company.

3.3 Method of Data Collection

The source of the data that are used in the paper included
 Primary and secondary sources, so the data will be collected through primarily and
secondary method or data collection.
 Primarily source of data – The primary data will collect from the selected respondent
through self administrated questionnaires that will be distributed to the company
customers, employees as well as interview the company manager using unstructured
interview. The questionnaire will be both open needed and close ended question.
 Secondary source data –in order to supplement to the primary source of information,
secondary data are collected from published on unpublished material, such as books,
News paper, Internet, annual and monthly reports of the company.

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3.4 Sampling Techniques

The samples are selected through simple random sampling techniques, because it give an equal
chance for all population included in the sample and to make the researcher free from biases and
also to use the research in a proper way and to save time.

3.5 Sample of The Population And Sample Size

The study is based on the risk management practice of Nile Insurance Company in Debre Brhan
town. From total population, 400 sample are taken for the research, out of 400 sample, 20(5%)
are customers, and 4(1%) are employees of the insurance company taken for the research study.

3.6 Method of Data Analysis and Presentation

Finally, the collected data are analyzed by using qualitative as well as quantitative description.
The data are presented in quantitative description basis of the percentage, which are used in
tables to make research finding clear. The qualitative nature of data refers the views and pinions
or non numerical characteristics of data which are believed to give more information on the
study area.

19
 Chapter Four
4. Data Presentation Analysis and Interpretation

In this section, the researcher has employed two primary data gathering techniques, which that
questionnaire and unstructured interview, as well as secondary data to gather the information.

4.1 Result of questionnaire collected from customers

This section present the result and interpreter it based on the information collected from the
customer. The researcher selected 20 customers to collect the necessary information, out of them
18 customer gave the necessary information and 2 of them did not return.

Table 4.1.1 Demographic information

Demographic information of the respondents include sex, age marital status and education
level. The researcher analyzed and interprate using the above four tables.
Source: Questionnaire 2005
Table 1 Sex
S. No Sex No of respondent Parentage
1 male 14 77.78%
2 Female 4 22.22%
Total 18 100%
Source: questionnaire 2005
According to the above table, 14 (77.78%) were male and 4 (22.22%) were female customer.
The researcher has identified most of the customer 14 (77.78%) were male customer.
Table 2 Age of respondent
S. No Age No of respondent Parentage
1 < 18 - -
2 19.32 12 66.67%
33-46 6 33.33%

20
 > 47 - -
Total 18 100%
Source: questionnaire 2005

The table depicits, age of the respondents. From the total of the respondents, 12 (66.67%) were
found between 19-32 age group and the remaining 6 (33.33%0 were found between 33-46 age
group. These information indicated most of the customer 12 (66.67%) were young also we can
understand. The remaining customer all most all nearest to the youngster age group. These
shows, insurance in Ethiopia were the recent phoneme non and the gentle man of the country
highly use it as a risk management tool.
Table 3 Marital status
S. No Marital status No of respondent Parentage
1 Married 4 22.22%
2 Unmarried 12 66.67%
Divorced 2 11.11%
Total 18 100%
Source: questionnaire 2005

The above table shows, 12 (66.67%) were un married, 4 (22.22%) were married and 2 (11.11%0
were divorced customer. According to the information most of the respondent were unmarried.
Table 4 Educational level
S. No Educational level No of respondent Parentage
1 Illiterate - -
2 1-8 - -
12th or 10th completed 2 11.12

Diploma 8 44.44
Degree and above 8 44.44
Total 18 100%
Source: questionnaire 2005

The table identifies educational level of the respondents. From the table above you can observe,
8 (44.44%) have degree and above 8 (44.44%) have diploma and 2 (11.11%) were 12 th or 10th

21
completed. Here the researcher can conclude 16 (88.88%) of the respondent were experts of
different professions.

4.1.2 Types of insurance policy customer bought

Table 5 Types of insurance policy
S. No Type No of respondent Parentage
1 Personal insurance 3 16.67
2 Property insurance 12 66.67
3 Liability insurance 3 16.67
4 Other - -
Total 18 100%
Source: questionnaire 2005
The above table shows that, 12 (666.67%) of the customer have property insurance policy, 3
(16.67%) have liability insurance policy and 3 (16.67%) have personal insurance policy. This
implies most o the customer have bought property insurance policy. According to the high
demand of property insurance, the risk management department highly concerned on it.
4.1.3 Occurrence of loss
Table 6 Loss face be fore
S. No Loss be fore No of respondent Parentage
1 Yes 9 50
2 No 9 50
Total 18 100%
Source: questionnaire 2005
The table reveals, 9 (50%) of the respondents faced loss before and 59 (5050 of the respondents
were free from loss. From the table the researcher has identified 9 (50%0 of the respondent were
face loss and the other equal portion of the respondent were not faced by any loss before.
4.1.4 Loss reduction method
All of the respondent, that faced loss before use insurance to reduce the potential loss, because
the loss can not reduced by self insurance according to it’s severity nad frequency.
4.1.5 Types of risk mostly faced and its reason
S. No Type No of respondent Parentage
1 Personal risk 2 22.22

22
 2 Liability risk 5 55
3 If other 2 56
Total - 22.22
Source: questionnaire 2005
The table reveals, 9 (50%) of the respondent faced loss before and 9 (50%) of the respondents
were free from loss. From the table the researcher has identified 9 (50%) of the respondent were
faced loss and the other equal portion of the respondent were not faced by nay loss before.
4.1.4 Loss reduction method
All of the respondent, that faced loss before use insurance to reduce the potential loss, because
the loss can not reduced by self insurance according to it’s severity and frequency.
4.1.5 Types of risk mostly faced and its reason
Table 7 Types of risk
S. No Type No of respondent Parentage
1 Personal risk 2 22.22
2 Property risk 5 55.56
3 Labiality risk 2 22.22
If other - 22.22-
Total 9 100
Source: questionnaire 2005
Depend on the table 2 (22.22%) of respondent faced personal risk, 5 (56.56) faced property risk
and 2 (22.22%) faced liability risk. The researcher can explain out of 9 (5050 of the total
respondents above half of 5 (55.56%) faced by property risk.
Reason for occurrence of loss
The respondents that are selected by the researcher give the following reasons for the occurrence
of the loss.
 Care lessens of the drivers
 Road problem – today in Ethiopia the government gave high attention for road projects,
due to this reason the road become narrower and unsuitable then car crashing rise and
 Lack of awareness and lack of sustainable rules and regulations source (Questionnaire0
and interview)

4.1. 6 Preferable of Nile insurance and its reason

S. No Type No of respondent Parentage

23
 1 Yes 18 100
2 No - -
3 18 100
Source: questionnaire 2005
From the table above you observed that 18 (100%) of the respondent prefer. Nile insurance
company than other insurance companies this indicate all of the respondent have good awareness
about the company.
Reason for preference of the company
Respondents underline the following reason, for why they prefer Nile insurance company.
 Nile insurance company provide strict under writing service strive for more efficient,
efficient, transparent, prompt and reasonable claim service, and training and advisory
service.
 Highest customer responsiveness and greater level of customer satisfaction and
 Providing quality service and its success in managing risk
(source, questionnaire and secondary data)
4.1.7 Customer attitude about Nile insurance
Table 9 Successfulness of the company
S. No Success No of respondent Parentage
1 Yes 18 100
2 No - -
3 Total 18 100
Source: questionnaire 2005
The table explain 18 (100%) of respondents replied the company is successful in managing risk
the research can identify the company is successful in managing risk.
4.1.8 Customer evaluation in managing risk
S. No Evaluation No of respondent Parentage
1 High 18 100
2 Medium 12 12
3 Low - -
Total 18 100
Source: questionnaire 2005

24
The table indicate, 6 (33.33%) respondent said the company have high capacity to manage risk
and 12 (66.67%) gave moderate evaluation. From the respondents, the researcher dig out most of
the customer 12 (66.67%0 evaluated the company to manage the risk, had moderate capacity.

4.1.9 Preparation for loss and espouser for risk

Table 11 Preparation of customer for loss
S. No Type No of respondent Parentage
1 Yes 15 83.33
2 No 3 16.67
Total 18 100
Source: questionnaire 2005
From the table 15 (83.33%) of the respondents were prepared for potential loss and 3 (16.67%0
were not prepared for less. The researcher expressed most of the responses give attention and
prepared in advance for loss.
Table 12 Customer exposure for risk
S. No Type No of respondent Parentage
1 Yes 9 50
2 No 9 50
18 100
Source: questionnaire 2005
The table indicate 9 (5050 of the respondents were exposed to risk and the other 9 (5050 of the
respondents were not exposed to risk. As are sult the researcher can conclude 9 (50%) of
respondent argved the idea of other 9 (5050 of respondents, 50 customers exposure to risk
depend on the witness of the respondents.
4.1.10 Providing rusle sand revaluation
Table 13 Rules and regulation
S. No Rules and regulation No of respondent Parentage
1 Yes 17 94.44
2 No 1 5.56
Total 18 100
Source: questionnaire 2005

25
The table depicts 17 (94.44%) of respondents repaid there is existing insurance policy and
procedure manual. Other 1 (5.56%0 respond there is no policies and procedures during the
purchaser of insurance policy. From the table the researcher can conclude there is risk mitigation
strategy. To interpreter the risk mitigation strategy polices and procedures are necessary.

Accordingly, policies and procedures have the following basic importance.

 Existing policy and procedure manual of underwriting and claims for general
insurance business and human resource management shale be revised and up
dated in response to internal and external dynamics.
 The new polices and procedures manuals to be prepared for finance and accounts,
legal, engineering, investment, underwriting and claim for long term insurance
business, marketing and it security system should enable to control existing and
emerging risks.
 Both existing and would be policy and procedure manuals should consider and
reflect strategic road map an management information system of the company.
As a result, polices and procedures have other derived importance to the risk management
department to manage the risk that may be internally and externally driven. The current scenario
shows there are there important risks that faced the company. Namely underwriting and liability
risk, operational and technological risk, and credit risk. To manage those risks the risk
management departments follow certain rules and regulations procedures.
(Source interview and secondary data)

4.1.11 Evaluation of company’s service

According to the respondents, the researcher identified there core service and evaluate them as
blow.
A. Underwriting service;- The company has a sufficient and reasonable advice about the
alternative policy options organizations and other issues before underwriting and issuing
a policy both for individuals and organizations as appropriate.
B. Claim service:- the company provides quality service in the provision of benefits (final
out put) to customers and it is a basis for the measurement of staff performance it is also
striving for more efficient, transparent, prompt and reasonable claim service.

26
 C. Training /Auditory services the following raining/advisory services can obtained in
consultation with the company.
Accident prevention and reduction training
Insurance products training
Advice on claims processes and procedures and pre and post risk assessment.
Source: (questionnaire and secondary data)

4.2 Result of questionnaire from customer

In this part the rsuklt of questionnaire collected from employees of the company were analyzed
and interpreted. All four employees that selected by the researcher were given the necessary
information.
4.2.1 Demographic information of employees
Table 1 Sex
S. No Sex No of respondent Parentage
1 Male 2 50
2 Female 2 50
Total 4 100
Source: questionnaire 2005

From the table 2 (50%) of the respondents were female and 2 (50%) of the respondents were
female. The researcher concluded the company have equal properation of employees based on
sex description.
Table 2 Age
S. No Sex No of respondent Parentage
1 <20 - -
2 2-30 2 50
31-40l 1 125
>40 1 25
Total 5 100
Source: questionnaire 2005

27
The table reveas 2 (50%) of respondents were between the age of 21-30 years, 1 (25%) of the
respondent included under the age of 31-40 years and the remaining 1 (25%0 held under the age
of 40 and above 40 years. From this information the researcher can extracted 2 (50%0 of the
respondent were under the age of 21-30 years.

Table 3 Marital status

S. No Marital status No of respondent Parentage
1 Marred 1 25
2 Unmarried 3 75
3 Divorced - -
Total 4 100
Source: questionnaire 2005

Table 4 Marital status

S. No Educational level No of respondent Parentage
1 Illiterate - -
12the and 10th completed
2 Certificate 1 25
3 Diploma 1 25
4 Undergraduate 2 50
5 Post graduate - -
Total 4 100
Source: questionnaire 2005
The table shows educational level of the respondents out of the total respodnt2 (50%0 had
degree, 1 (25%) had diploma and 1 (25%0 had certificate the researcher can understand 2 (5050
of the company employees were highly skilled labor force.
4.2.2 Method of preparation of loss

Table 5 Methods of risk management

28
 S. No Methods No of respondent Parentage
1 Los prevention 2 50
2 Loss reeducation 2 50
3 Payment for loss - -
Total 4 100
Source: questionnaire 2005
The table reveals 2 (50%0 respondents agreed on loss prevention and other 2 (50%) respondents
gave priority for loss reduction. The researcher identified loss prevention and loss reduction
methods to manage the risk.

4.2.3 Reason for selecting the methods

Loss prevention:- Loss prevention is primary function of insurance that issued to prevent the
loss before it occur. It is easy to use to prevent the loss before it occur. It is easy to use, provide
capital and improve efficiency to the insurer and insured.
Loss reduction: even if pre loss methods are used un institutional loss may be occurred. As a
result the insure can pay reasonable payment to the insured and the insured also pay reasonable
premium. (source: enterview and questionnaire)
4.2.4 Steps for identification of loss
Table 6 Steps of loss identification
S. No Rules and regulation No of respondent Parentage
1 Yes 4 100
2 No - -
Total 18 100
Source: questionnaire 2005

The table shows 4 (100%) of the respondent repaid there is steps starting from identification of
loss to payment of so. Based on this information, the researcher can conclude there is steps to
identify the loss.
4.2.5 Procedure (steps) followed by the company
Based on the information collected from the employees there are there risk management steps,
namely identification, measurement and mitigation of inherent and significant risks.
A. Risk identification:- This the first step where by unique and common risk understood and
identified. Here it must be made clear that some risks may be specific and unique to one

29
 company like that of vision and mission on the other hand, money risks are common to
industry players, i.e all insurance companies. This may be viewed as internally driven and
externally driven risk.

In the identification process of inherent and significant risk, common mistake must be
avoided in the since that all problems should not necessarily be perceived as risk per see of
course they may impose risk more so, those risks must be significant interims fop their
adverse consequences and severity of undesirable effect.

B. Risk measurement:- Hence once the risk identification step is completed, the
significance of identified risks should be measure and their aggregate impacts on
probability or bottom line result must be determined carefully and thoroughly.
Continuous assessment to determine the frequency or probability of occurrence and degree of
severity of adverse consequences is equally important it is also concerned with calculation of
risk.
More over, there needs to be clear understanding as to what risks are to be measured. How
they are to be measured. The how part entails measurement tools and methodology which
externally involve both qualitative and quantitative standards.
C. Risk mitigation : Risk control and monitoring
Once the risk associated with particular action identified a whose impacts are determined or
measured, the next step is managing them prudently this step of risk management involves
two common and universal tools described as under.
Risk control: The company should minimize adverse effects of the risk (not directly the risk
exposure it self). Good risk control may go to the extent of avoiding adverse consequences.
Risk monitoring: This tool is concerned with evaluation and follow up on changes in risk
profile and properties above all, monitoring risks means developing reporting system that
indicate adverse changes in risk profile. (Source: interview and secondary data).
4.2.6 Approaches used to identify potential loss
Table 7 Approaches

30
 S. No Approaches No of respondent Parentage
1 Risk analysis questionnaire 2 50
2 On site inspection - -
3 Financial method 2 50
4 Contract analysis - -
Total 4 100
Source: questionnaire 2005

The table shows 2 (5050 of the respondents said the company uses risk analysis questionnaire to
identify potential losses and 2 (50%) of respondents replied that the company uses financial
method. The researcher can conclude both risk analysis questionnaire and financial methods are
best approaches to identify potential loss.
4.2.7 Kinds of risk mostly occurred and its reason
Table 8 Kinds of risk mostly occurred
S. No Rules and regulation No of respondent Parentage
1 Personal risk - -
2 Property risk 3 75
3 Liability risk 1 25
If other - -
Total 18 100
Source: questionnaire 2005

Based on the above table, 3 (75%) of employees said mostly property risk is occurred and the
remaining 1 (25%) were replied liability risk is mostly occurred. The researcher identified
property risk is occurred on the company as compared to other risks.
Reason for occurrence of loss
From the collected information, the researcher analyzed the following reasons for occurrence of
loss.
 Carelessness of the driver
 Unsuistainablity of the road
 Lack of rules and regulation and
 Poor under writing procedures are reason for the occurrence of the loss. (source:
questionnaire 2005)

31
4.2.8 Occurrence unforeseen risk
Table 9 Whether unforeseen risk is happen or not
S. No Respondents response No of respondent Parentage
1 Yes 4 100
2 No - -
Total 4 100
Source: questionnaire 2005

The table reveals 4 (10050 of respondents replied un foreseen risk is happened. Thus, the
researcher can sad unforeseen risk is occurred.
4.2.9 Effects of risk to the company
4.2.10 Table 10 Economic effect
S. No Respondents response No of respondent Parentage
1 Yes 4 1--
2 No - -
Total 4 100
Source: questionnaire 2005

The table indicate 4 (100%0 respondents replied risk affect the company economically. The
researcher can generalized risk affect the company’s ability to be participate in its operation.

4.2.11 Problem during managing risk

4.2.12 Table 11 problem of risk management
S. No Respondents response No of respondent Parentage
1 Yes 4 1--
2 No - -
Total 4 100
Source: questionnaire 2005

The table explain, 4 (100%) respondents said there ar problems during managing the risk. This
indicate to the researcher, during managing risk the stake holder need proper risk identification
steps.
4.2.11 Risk management department

32
Table 12 Existence of risk management department
S. No Respondents response No of respondent Parentage
1 Yes 4 1--
2 No - -
Total 4 100
Source: questionnaire 2005

The table explain, 4 (100%) respondent replied there is risk management department in the
company. The researcher can say the company give consideration for risk management practice.

4.2.13 Preparation of the company

Table 13 Preparation for future loss

S. No Idea No of respondent Parentage

1 Agree 3 75
2 Strongly agree 1 25
3 Neutral - -
4 Disagree - -
5 Strongly disagree - -
Total 4 100
Source: questionnaire 2005

The table indicate, 3 (75%) of the respondent agree on future preparation of the company and
the remaining 1 (2550 strongly agree on the idea. These shows to the researcher even through the
degree was being deference, all respondent agreed on the preparation of potential loss that might
occur in the future.
4.2.14 Approaches to improve risk management practice
The approaches that the company’s used to improve
The risk management practice are the following:-
 Make efficient $ effective underwriting activity
 Hiring qualified employee
 Work coordinately with the risk management department that exist in the head
office

33
  Providing training $ reward to employees.
These implication is that the company used different techniques to improve its risk management
proactive. It is highly concern on underwriting activity and employee capacity to enhance its risk
management. (source: Questionnaire).

Reference
1. George E.Rejda, Principle of Risk Management and insurance 6th edition.
2. Trieschrtann and sander G.Gustovosonl 1998, Risk Management and Insurance 10 th
edition, published in New york.
3. Trieschitann Hoy 1. Sommek, Risk Management and Insurance 12th edition.
4. Alexander and chicherter c 1998, Risk Management and Insurance published in New
york.
5. C.Arthur William, Jar, etal 1981, Risk Management and Practice.
6. http.www.nberiorg.com

34
 Jimma University
College of Business and Economics
Department of Banking and Finance
Questionnaire for Customer
Appendix A

The title of the study is what are the risk management practice of Nile insurance company inc as
of Debre Brhan town, for the purpose of fulfilling BA degree. Therefore you are kindly
requested by the researcher. The aim of the study is primarily to scholar purpose. So give
information which will be the best for the quality of the study. Choose your best and put (x)
mark on the blank space.
Thank you for your willingness

1. Personal information
Sex A. male_____ B. Female________
Age group A. < 18 ___ B. 19-32____ C. 33-46 ____ D. 47 above _____
Marital status A. Married____ B. Unmarried____ C. Divorced_______
Educational level A. Literate B. 1-8______ C. 12th or 10th completed _____
D. Diploma_____ E. Undergraduate and above______

35
2. What type of insurance policy you have bought in this company?
A. Personal_____ B. Property ______ C. Liability_____
If other

________________________________________________________________________
________________________________________________________________________
_____________
3. Have you face any loss before?
A. Yes_____ B. No_______
4. If you say “yes” how you reduce that loss?
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

5. Which types of risks are mostly faced by you?

A. Personal ______ B. Property _____ c. Liability _____
If other

______________________________________________________________________________
____________________________________________________________
6. What are the reason for the occurrence of loss based on the above question?
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
7.Do you think Nile insurance company is preferable insurance company?
A. Yes ______ B. No ________
8. What are the reason to choose Nile Insurance
Company?--------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------

36
-------------------------- 9. Do you think Nile Insurance is success full in
managing risk? A. Yes ______ B. No_______
10 What is your evaluation toward Nile Insurance company’s capacity in order to manage
risk? A. High _______ B. Medium________ C. Low ____ 12. Do you
think you are well prepared in advance for potential loss?
A. Yes ____ B. No _______

11. Do you think the customer of Nile insurance company knowingly exposed to risk?
A. Yes _______ B. No _____
12. When you buy insurance from the company does the company provide rules and regulation?
A. Yes ______ B. No _______
13. What is your evaluation for Nile insurance service?

______________________________________________________________________________
_________________________________________________________

Jimma University
College of Business and Economics
Department of Banking and Finance
This questionnaires prepared for organization employees
Appendix B questionnaires
Dear respondent
In conducting the research title of what are the risk management practice of Nile insurance, in
case of your organization for partial fulfillment of BA Degree. Therefore you are kindly
requested to provide the information, I need at their point the researcher will be like to assure
you that your response will be confidentially kept and is only used for scholarly purpose. So fell
free where you give information.
Thanks for your cooperation

1. Personal information

37
1.1 Sex A. Male  B. Female
1.2 Age A. < 20  B. 21-23
1.3 Marital status A. Married  B. Unmarried  C. Divorced  D. Divorced 
1.4 Educational status
A. illiterate B. Grade 1-8 C. certificate  D. Diploma
E. Undergraduate  F. Post graduate 

2. In case of preparation for potential loss, which method is highly prioritize?

A. Loss prevention B. Loss reduction  C. Payment for loss 
3. Base on question No .2, what is your the reason for giving priority?

4. In case of managing potential losses, is there any steps that are followed starting from
identification of loss to payment losses incurred in your company?
A. Yes B. No 
5. What are the procedures that are followed by the company?
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------
6. In case of identifying potential losses, what approach did your company used?
A. Risk analysis questionnaire B. on site inspection C. Financial method
D. contact analysis 

38
If other
-------------------------------------------------------------------------------------------------
------------------------------------------------------------------------

7. What kind of risk mostly occurred?

A. Personal  B. Property  C. Liability 
If any other
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------
8. What is the reason for the occurrence of loss?
-----------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
9. If your company faced unforeseen risk? A. yes  B. No

10. Do you think that occurrence of risky situation affect the company economic activity?
A. Yes  B. No 

11. In what ways the risky situation affect the success of the
company?--------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
-------------------------------------------- 12. Is there major problem facing your company during
managing risk?
A. Yes  B. No 

13. Is there special department charged with overseeing the company’s risk management
activity? A. Yes  B. No
14. At the time of preparing potential losses that might in the future, NILE Insurance Company
consider its financial strength.

39
Base on the above idea you are
A. Strongly agree B. Agree  C. Neutral  D. Disagree 
E. Strongly disagree 
15. What are approaches used by a company to improve its risk management practice?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________

Jimma University
College of Business and Economics
Department of Banking and Finance
Appendix C
It is interview question for the company manager of Nile insurance company of Debre Brhan
town to get relevant information about the practice of Nile insurance company for the purpose of
research in the area.
The information needed from your organization related the following

40
1. What types of insurance policy is given by the company?
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------
2. Based on Q.1,Which one is mostly face loss? Why?
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
---------------------------------------
3. How can the company is managing unexpected risk?
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------
4. What are the approaches the company is used to improve its risk management practices.
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
--------------------------------------------------

41