EFFECTS OF DIVERSIFICATION ON RISK MANAGEMENT OF SAHAM ASSURANCE RWANDA AND RWANDA SOCIAL SECURITY BOARD
The study was conducted to investigate the effects of diversification on risk management of Saham Assurance Rwanda Ltd and Rwanda Social Security Board (RSSB).In Rwanda many companies still under pressure to balance risk with the opportunities required to achieve their objectives and also many of the companies are unable to accurately assess their portfolio’s performance. The objective of this study was to find out the relationship between diversification determinants and risk management indicators at RSSB and Saham Assurance Rwanda. To evaluate the effects of diversification on risk management, both primary and secondary data were gathered in this research in order to capture the relationship of diversification and risk management, It used a correlation and descriptive research, from the population, a sample size of 52 respondents selected using Slovins formula. The findings indicate that all statements of asset allocation have represented an overall mean of 4.007 and 3.89 (strong) and this implies that asset allocation has a significant influence on risk management in RSSB than in SAHAM. All six statements of attractiveness of the market have embodied an overall mean of 3.78 and 4.127 (very strong) which entails that attractiveness of the market has a significant effect on risk management. All statements of financial risk management have demonstrated an overall mean of 4.34 and 4.214 (strong). All statements of business risk have generated an overall mean of 3.91 and 4.289 (very strong) in general for the two insurance companies and this implies that good diversification can be a vital instrument in increasing the good risk management. The results indicated that diversification has a positive moderate correlation to risk management equal to 0.496** .in RSSB and the weak correlation in SAHAM equals to 0.204** Thereafter the conclusion is that variables are correlated and null hypotheses were rejected because the variables are correlated. This shows that diversification has a significant influence on risk management in RSSB than in SAHAM due to the better practices of diversification in RSSB than in SAHAM.