Evaluating the Impact of Risk Management Strategies on the Success of Financial Enterprises in Kigoma, Tanzania

Abstract

The stability and performance of financial
enterprises are crucial, yet Tanzanian financial
enterprises have faced a challenging business
environment over the past decade. This study
examined the impact of risk management
strategies on the success of financial enterprises
in the Kigoma region using the sampled 300
financial enterprises. Moreover, a cross-sectional
research design and multistage sampling were
employed to select districts, wards, and
participants. Data were analyzed using both
statistical and inferential methods, including
multiple linear regression. Findings indicated that
liquidity risk preparedness and risk-adjusted
pricing have a significant negative effect on profit
generation, while capital adequacy, regulatory
compliance, enterprise location, enterprise
category, and enterprise size significantly
enhance profitability. Additionally, challenges
such as financial constraints, technology
adaptation, lack of skilled personnel, data quality
issues, cultural resistance, and regulatory
complexity were identified as major hindrances to
effective risk management. The study recommends
that financial enterprises maintain robust capital
adequacy, implement comprehensive compliance
programs, adhere to regulatory standards, and
develop sound liquidity management policies to
enhance success and stability