ISSN 28111915 AJORMS; Url: https://ajormsplasu.ng; E-mail: info@ajormsplasu.ng Vol. 3 [1] June, 2023 https://doi.org/10.62244/ajorms.v3i1
Kasmwakat Reuel Dakung1 and Joseph Arin Shedrach2
1Department of Insurance, University of Jos-Nigeria dakungkasmwakt@gmail.com.
2Department of Insurance, University of Jos-Nigeria joshehdrarin@gmail.com.
ABSTRACT
This research study was aimed at examining the impact of risk management on the profitability of manufacturing industries in Nigeria, focusing on the Grand Cereal industry in Plateau State. The study investigated the relationship between three independent variables, namely materials price fluctuation risk, operational risks, and supply chain disruption, and the dependent variable of profitability, proxied by return on equity (ROE). The research design employed in this study is a descriptive survey research design. The study population consists of active functional, strategic, and various lines managers in the Grand Cereal industry, Plateau State. A sample size of 384 respondents was selected using the Cochrane formula at a 5% level of significance. The data was collected through a questionnaire administered to the selected respondents. Data analysis was performed using descriptive statistics for the common sample and the Ordinary Least Squares (OLS) regression analysis. The findings of the study reveal a significant and positive relationship between return on equity (ROE) in the manufacturing industry and three key risk management factors: operational risk management, supply chain risk management, and material pricing risk management. These findings emphasize the importance of effectively managing operational risks, such as process efficiency and safety measures, to enhance financial performance. Based on the results, it was concluded that manufacturing firms that prioritize operational efficiency, safety measures, and risk mitigation strategies can expect improved profitability and stronger returns on equity. The study recommended that manufacturing firms leverage the positive and significant relationship between operational risk management, supply chain risk management, material pricing risk management, and return on equity (ROE) to strengthen their financial performance. Furthermore, optimizing material procurement strategies, minimizing the impact of price fluctuations, increasing resilience, and gaining a competitive edge in the industry are crucial recommendations for manufacturing firms to enhance their profitability.
Key words: Manufacturing firms, Profitability, Risk Management