COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

ASSESSMENT OF RISK MANAGEMENNT IN AWASH INSURANCE CORPORATION

(IN CASE OF ADDIS ABABA, MEXICO BRANCH)

A RESEARCH PROPOSAL SUBMITTED TO ADDIS ABABA UNIVERSITY, COLLEGE OF BUSINESS

AND ECONOMICS, DEPARTMENT OF MANAGEMENT IN PARTIAL FULFILLMENT OF THE
REQUIREMENT FOR THE DEGREE OF BACHELOR OF ARTS (BA) IN MANAGEMENT

Prepared By: Addisu Tina

ID No. UGR/1435/14

Adviser: - Mohammed Jemal

ADDIS ABABA, ETHIOPIA

JANUARY, 2025
Table of Content Pages
Abstract .......................................................................................................................................................................3

Chapter one .................................................................................................................................................................4

1.1 Background of the Study ...................................................................................................................................... 4

1.2 Statement of the problem ......................................................................................................................................5

1.3 Definition of Term ................................................................................................................................................6

1.4 Objectives of the study ......................................................................................................................................... 6

1.4.1 General objectives. ............................................................................................................................................ 7

1.4.2 Specific objectives ............................................................................................................................................. 7

1.5 Research Question ................................................................................................................................................ 7

1.6 Significance of the study ................................................................................................................................... 7

1.7 Scope of the study .................................................................................................................................................8

1.8. Limitation of the study ........................................................................................................................................ 8

1.9 Research Methodology ......................................................................................................................................... 8

1.9.2 Description of the study area ......................................................................................................................... 9

1.9.3 Research Design and Approach .....................................................................................................................9

1.9.3.2 Research Approach .....................................................................................................................................9

1.9.4 Data Type, Source, and Methods of Data Collection ...................................................................................... 10

1.9.4.1 Data types ` ..........................................................................................................10

1.9.4.2 Source of data ........................................................................................................................................... 10

 1.9.4.3 Data collection techniques ........................................................................................................................10

1.9.5 Population and Sampling Design .................................................................................................................... 11

1.9.5.1 Target population ......................................................................................................................................11

1.9.5.2 Sampling Design .......................................................................................................................................11

1.9.6 Data analysis tools ....................................................................................................................................... 11

1.9.7. Work Plan (Time Budget) Schedule ...........................................................................................................12

1.9.8. Cost (Budget) Breakdown .......................................................................................................................... 12

REFERENCE ........................................................................................................................................................... 12

Appendices ............................................................................................................................................................... 13
 Abstract
This paper trying to study the assessment of risk management practices. The general objective of this
study was to assess the risk management practice of awash insurance corporation Adiss ababa, Mexico
branch. The paper used both primary and secondary data sources. The primary data are collecting from
the employees of the organization that are targeting as the sample size.

The researcher will be using census techniques in order to effective and essential data. The researcher
findings that went finding risk happen in the organization in case of general risk management system
such as credit risk management, liquidity risk management, and interest rate risk management and other
of the carelessness of the organizational financial and operational. The paper also descriptive statics
such as tabulation and percentage utilizing.

With the help of above methodology and data the researcher arriving on the major finding of the Awash
insurance corporation in Addis Ababa branch have the application of art & science of risk management
system and it have also to do all awareness creation the risk management system have to be changing
with the time passage and there is low understanding about the risk management adopted by awash
insurance Corporation in Addis Ababa branch and suggested that to minimize the possible loss
exposure in the insurance by making it at location, Culture and weather condition .
 Chapter one
1.1 Background of the Study
Risk is the broad concepts of contractual activity. Economist behavioral scientist, risk theorist function
and actuaries each have their concept of risk (TekleGorgis 2004) risk can be define as uncertainty
concerning losses. The risk surrounding potential losses creates a significant economic burden for
business government and individual. Billions of dollars are spending each year on strategy of financing
potential losses. But when losses are not planning in advance, they may cost even more business as well
as individuals may try to avoid risk as much as possible or reduce the risk opportunity cost activity for
gone due to risk consideration. It is expense of strategy of finance of potential possessed and cost in
reimbursed losses and cost in reimburse loss (Triesch man 2005)

Risk management is defined as systematic process to the identification and evaluation of pure loss
exposure faced by an organization or individual and for selection and implementation of the most
appropriate technique for facing such risk. For example, measures adapted to tearing of explosive
planted firefighting system, anti-theft systems etc. (Rejda, 2008). According to Triesihman, 2010, risk
management is a managerial process that involves the executive function of planning, organizing
loading and controlling those activities in firm that deal with specified types of risk is in order to
maximize the value of an organization.

Risk management is a process that identifies loss exposures faced by an organization and selects the
most appropriate techniques for treating such exposures. Because the term risk is ambiguous and has
different meanings, risk managers typically use the term loss exposure to identify potential losses.
(George E., 2014)

Organizations face a very wide range of risks that can impact the outcome of their operations. The
desired overall aim may be stated as a mission or a set of corporate objectives. The events that can
impact an organization may inhibit what it is seeking to achieve (hazard risks), enhance that aim
(opportunity risks), or create uncertainty about the outcomes (control risks).Risk management needs to
offer an integrated approach to the evaluation, control and monitoring of these three types of risk. The
consequences of failure to adequately manage risk can be disastrous and result in inefficient operations,
projects that are not completed on time and strategies that are not delivered, or were incorrect in the first
place (Paul Hopkins, 2010)

The risk manager is charged with minimizing the adverse impact of losses on the achievement of the
company’s goal. It is also specific approach to the problem faced by the business that deals with the
techniques of forecasting future so, as plan, organize direct and control effort to minimize the adverse
effect of those potential losses. It is the reduction and prevention the unfavorable effects of risk at
minimum cost through its decision measurement and control (Henet, Van Web, 2011). According to
William T, 2009 risk management is a general management function that seeks it to identify, assess and
address the cause and effect of uncertainty and risk in an organization in order to attain the goals and
objectives that organization in most direct, efficient and effective path. It is systematic way protecting
business resources and income against losses. So those in the organization aim at reaching the
organizational goals without interruption

Risk management method can be broadly classified as (1) loss control, (2) loss financing and (3) internal
risk redaction. Loss control and internal risk reduction commonly involve decisions to invest resources
to reduce expected losses. They are conceptually equivalent to other investment decisions. Such as a
firms decisions to buy a computer. Loss financing decisions refer to decisions about how to pay for
losses if they do occur (Scott G. & Gregory R., 2012)

1.2 Statement of the problem

A risk management statement is necessary in order to have an effective risk management program. This
statement outlines the risk management objectives of the firm, as well as company policy with respect to
treatment of loss exposures. It also equates top level executives in regard to the risk management
process, gives the risk managers greater authority in the firm, and provides standards for judging the risk
managers performance (Teklegiorgies, 2004) the risk management practice are the most important
activates of the organization to reach its goal and objectives as well as to maintain its comparative
advantage. Organizations and institutions can reduce risk by applying popper risk management practice.
An effective risk management practice helps organizations and institutions to establish rules and
procedures to prevent operating losses. The possible problem of the organization that need the solution
are what important risk controlling mechanism of the activity of awash Insurance Corporation Adiss
Ababa Mexico branch. (Trish man 2005)

In addition a risk management manual may be developing and using in the program. The manual
describes in some detail the risk management program of the firm and can be very useful for training
new employees who will be participating in the program. Writing the manual also forces the risk
manager to state precisely his or her responsibilities, objectives and available techniques. Those and
other relating reasons initiating the researcher to study the research in the insurance on Assessment of
risk management practice in case of awash insurance corporation in adissababa Mexico Branch.

1.3 Definition of Term

Risk management is the systematic process of identifying, assessing, and responding to potential risks
that could impact an organization's objectives. It involves proactively anticipating threats and
opportunities and taking appropriate actions to minimize negative consequences and maximize
positive outcomes. It involves establishing clear policies and procedures for risk identification, using
tools like risk matrices to assess likelihood and impact, developing risk mitigation strategies (avoidance,
reduction, transfer, acceptance), and continuously monitoring and reviewing the effectiveness of these
strategies within an organization's daily activities.

1.4 Objectives of the study

Objectives can be general or specific. The general objective of the study states what you expect to
achieve in general terms. Specific objective breakdown the general objectives into smaller, logically
connected part that systematically addresses the various aspects of the problem. The general and specific
objectives of this study are describing as follows;

1.4.1 General objectives.

The general objectives of the study would be assessing risk management practice on awash Insurance
Corporation in Adissababa Mexico branch.

1.4.2 Specific objectives

 To assess policies, procedures and technique of risk management using in awash Insurance
Corporation (adissababa Mexico branch)

 To assess the service delivered by awash Insurance Corporation A.A Mexico branch.

 To identify the major risks faced by awash Insurance Corporation adiss ababa branch.

 To identify the basic problems in risk management practice of awash Insurance Corporation
awash branch practice.

1.5 Research Question

 What are policies, procedure and technique of risk management in Awash Insurance corporation
Adiss ababa branch?

 What are the services delivered by awash insurance corporation Adiss ababa?

 What are the major risks faced by Awash Insurance Corporation Adiss Ababa branch?

 What are the basic problems in risk management practice of awash insurance Corporation Adiss
ababa branch practice?

1.6 Significance of the study

The research would help all those who deal with information relating to the risk management practice of
awash insurance corporation adiss Ababa branch this research paper would mainly use for: -
Management bodies of adiss ababa branch of awash Insurance Corporation through providing
necessarily information about risk management practice performance of insurance in order to minimize
risk. It also helps other insurance companies to enhance their risk management practice. This study
would be used as reference for other researcher to conduct further studies on the same area.

1.7 Scope of the study

Awash Insurance Corporation has different branches all over the country but the researcher would be
focus on the awash insurance corporation Adiss Ababa Mexico branch. Because of cost and time
constraint the study will be limiting only in Adiss Ababa branch and also the study would cover only
about the financial and operational aspect of risk management practice and its effect on performance.

1.8. Limitation of the study

Assessing all Insurance companies risk management practice is better for their success and continuous
development of the institution. But it is difficult task to assess the risk management practices of all
Insurance Companies because it takes more time and financial limitation will be occurring. In addition,
it needs experience and deep knowledge of research therefore it is difficult task for beginners to assess
all insurance companies. Because of above stated reason and to make the study manageable and reliable
the study will be restricting only in assessing the risk management practice of awash Insurance
Corporation in Adiss Ababa Mexico branch.

1.9 Research Methodology

1.9.1 Introduction

This chapter is concentrating on the methodology that will be adopting throughout the study. It includes
the research design proposing to assess risk management in Awash Insurance Corporation in Mexico
branch, the type of population and data that will be using to collect the data, the methods to be
employing to run the data and the data analysis and interpretation will be accompanying in this chapter.

1.9.2 Description of the study area

The study is proposed as mainly concerning with assessment of risk management in Awash Insurance
Corporation in Mexico branch in Addis Ababa.

1.9.3 Research Design and Approach

1.9.3.1 Research Design

The research methodology begins by presenting the overall research design. Research design is the
conceptual structure with in which research is conducted. It constitutes the blue- print for collection,
measuring, and analysis of data. The choice of appropriate research design will help the researcher to
answer the research questions and to satisfy the research objectives. Therefore, it is a paramount to
properly define and evaluate the research design before conducting the research. .

In this study I will use descriptive types of research. Descriptive design is a method that concerned with
describing the characteristics of particular individual, event or action. There are some reason for aiming
to use this method these are :- first, it will reduces the data summary format and transformation of raw
data in to a form that will make them easy to understand and interpret, second, it is also easy as well as
some body will reach or understand in simple manner and finally it will give detail information
concerning the issue under study and it will used to give so recommendation concerning to this study
by describing risk management practice at Awash Insurance Corporation in Mexico branch.

1.9.3.2 Research Approach

According to Creswell (2009), there are three basic research approaches; these are quantitative,
qualitative and mixed research approaches. Quantitative research approaches is based on the
measurement of quantity or amount. It is applicable to phenomena that can be expressing in term of
quantity, and qualitative research approaches is concerning with qualitative phenomenon. According to
R. Cooper (2003) mixed method research provides that offset weakness of quantitative and qualitative
methods. The researcher will use mixed research approach because it makes the study open to the
respondents and enable the researcher’s to learn about the knowledge attitude and experience of the
respondent.

1.9.4 Data Type, Source, and Methods of Data Collection

1.9.4.1 Data types `
The researcher is going to use both quantitative and qualitative data from questioner, interview and
written material or document in order to bring strength for the study. Qualitative type of data is defining
as it is concerning numerical data subjective assessment of attitude, open on and behavior. The rational
for the use of quantitative type of data is to form data based and the rational for the use of quantitative
type of data in situation is function of researcher’s sights and impression.

1.9.4.2 Source of data

The researcher will use both primary and secondary source of data. Primary data will be collecting from
the organization respondents with the managers of the awash insurance corporation of Mexico branch.
Since this data is first and it is reliable for investigating and evaluating the case of risk management
practice of Awash Insurance Corporation in Mexico branch, it is requiring by the study for providing
better and routine information to this study. Secondary data will be collected from policy, manual,
procedural manual, and any other published sources which will related to risk management are going to
be using to investigate problems and recommend what will be ought to be done in the future.

1.9.4.3 Data collection techniques

The researcher will focus on questioner’s data collection techniques because it is preferable to elaborate
the problems which were stated in the basic. The primary data will be collecting through making
interview to the managers and by distributing questioner to the employees to add accuracy and relevance
of information. Secondary data will be collecting from documents, books, manuals, different reports and
web sites which will related to risk management are going to be uses to investigate problems and
recommend what will be ought to be done in the future

1.9.5 Population and Sampling Design

1.9.5.1 Target population
In Ethiopia, Awash Insurance Corporation has a number of branches, but the study will take as a Target
population only one of the branches which is found in Adiss ababa called Mexico branch. Awash
Insurance Corporation of branch have 15 employees who have currently serving and operating the
institution.

1.9.5.2 Sampling Design

In this study the researcher is aims to use census sampling method because of the population small in
number and easily manageable. The researcher will conduct interview with the manager since
conducting interview for them it would be better useful for gathering different information about how
the institutions risk management practice at different perspective. In addition to this, more efficient and
critical information will be collecting from employees especially that have connection with risk
management by using questionnaires because these employees are familiar with information of risk
management and routine information concerning to this study will be gathering from these employees.

1.9.6 Data analysis tools

After collecting the data I will analyze it through descriptive method. Because descriptive type is an
appropriate method to examine the theoretical and present practical situation of effect. And descriptive
type is makes the study opens to the experience of the respondents. After the relevant data will be
collecting the researcher used descriptive analyze. Finally survey result from questionnaires will be
represent through written form, Table and data percentage
 1.9.7. Work Plan (Time Budget) Schedule
N Tasks Time schedule
o. Decemb January Febru march April may june
er ary
1 Selecting the topic and X
visiting the study areas
2 Proposal writing x
3 Proposal presentation x
4 Data collection x
5 Data analysis X
6 Submission of final paper X

1.9.8. Cost (Budget) Breakdown

Item Quantity Unit cost (in birr) Total cost
Writing paper 50 pages 15.00 750birr
Printing paper 150 pages 2.50 375 birr
Binding 2 25 .00 50 birr
Flash 1 400 400 birr
CD 1 60 60 birr
Tea 400.birr
White paper 100 1birr 100 birr
Others - - 1,000 birr
Total 3,135 birr

REFERENCE
Arahasnabakaevamanzura, (2010). Credit risk management and apron fatality in commercial bank in
Sweden.

Creswell, 2009, research design, qualitative, quantitative and mixed methods approach 2ndedn

Donald R.Cooper, Pamela s.andclindler., (2003). Business research method .9thEdn

Emmetvaghan and there Vaughan, (2013). Essential of risk management and insurance,joley and sonjinc
2nd edition.

Emmete and vaugran, (2010). Fundamental of risk management insurance, jolly and song inc9thed.

FasikaFirew, (2012). Assessment of operational risk management techniques on central bank on

Ethiopia Addis Ababa University Ethiopia.

George Erejda(2014). Principles of risk management and Insurance person education 8thedn.

Girmamekesha, (2010). Credit risk management and its impact on performance on commercial bank of
Ethiopia Addis Ababa University Ethiopia.

Grenninghennie van and brantovi Sonja, (2011). Analyzing managing banking risk, World Bank 1stedn.

Grenninghennre van and brantovic Sonja, (2003). Analyzing and managing banking risk, World Bank
2ndedn.
 Appendices
Department of management

Dear respondents
Questionnaire prepared to employee of Awash insurance, Mexico branch
The major objective of the study is to assess risk management practice in your organization. In filling
out the questioners please; carefully and genuinely will contribute to words your organization as the
reasonable output of the study is expected from the researcher.

Please try not to answer the question according to your choice.

Please not that researcher in this regard assures you that it is not attest of competency and
all the information you prove will be confidential and to be used only for research
purpose.

N.B please give your answer according to your choice for each question by putting mark
in the boxes in the trends of the alternative.
 Please do not use more than one alternative.
 Do not write your name.

 Part one: general information

1. Sex: male female

2. Educational level: certificate some collage course degree

Above 1st degree

3. Position: division manager branch manager marketing officer

4. Service year: below 5 year 5 – 10 year above 10 year
  Part two

1. How do you believe that the Art and science of risk management system are well
applied in your insurance?
2. Are you satisfied with the risk management system adopted in Awash Insurance
Corporation in Addis Ababa Mexico branch?
Yes no
3. Do you think that the best procedure of risk management today will be the best next
year?
Yes no yes but not necessary
4. Do the management have a policy to follow the employees in risk controlling
mechanism? Yes No
5. How do you think about risk management techniques adopted by Awash Insurance
Corporation in Adiss Ababa Mexico branch?
Not do somehow not at all very well
6. Have you attract or good relation with other employees with in the institution
to reduce risk exposure in your working condition?
Yes No
7. Is there any loss exposure in Awash Insurance Corporation in Addis Ababa Mexico
branch?

Yes No I am not quit aware of it

8. If your answer is yes question No 7 which one is the major loss exposure in the insurance?

Location security system

Weather condition culture

 9. Which of the following risk control is/are existed in your insurance?

Avoidance Combination Separation Loss prevention and redaction

10. Which part of the insurance primarily meets with risk?

Employees Manger both

11. What is your base to select risk management techniques?

Effectiveness Environments Safety to apply Mangers’ judgment

12. Is there any advantage that gain from measuring potential loss?

Yes No

13. Have you face a problem in risk management practice of the institution?

Yes No

Appendix 2

Interview Question

1. What types of risk management techniques do you apply in your institution?

2. Have you identify the major risk exposure? If so, what are those?
3. Have you face a problem in risk management practices in the institution? If so
what are the problem?
4. If you face a problem what type of measures had you take to solve the problem?
5. What are the preventive technique and control procedures for the problem
exposes you