RISK MANAGEMENT AND PROFITABILITY OF AGRIBUSINESS FIRMS IN KIAMBU COUNTY, KENYA

Abstract

Profitability is a key indicator of performance and sustainability for agribusiness firms in Kenya, particularly in Kiambu County where agriculture plays a vital role in household income and food security. Despite this, many firms in the region have faced stagnant and some a decline in profitability. This study examined the influence of three dimensions of risk management that is fraud prevention, insurance adoption and systematic risk assessment, on the profitability of agribusiness firms in Kiambu County, Kenya. Primary data was collected through semi-structured questionnaires administered to firm managers, finance managers, and internal auditors, with a sample of 55 firms drawn from a population of 64 agribusinesses, resulting to 165 respondents. Data covering the period 2020 to 2024 were analysed using descriptive statistics, multiple regression analysis, and diagnostic tests with SPSS version 21. The findings revealed that systematic risk assessment had a positive and statistically significant effect on profitability, while insurance adoption and fraud prevention showed positive but insignificant effects, due to high insurance premiums, delayed claim settlements, and limited integration of fraud control systems in smaller firms. The study concludes that structured risk management is indispensable for sustaining profitability in agribusiness firms. The study recommends that managers institutionalize comprehensive risk assessment processes, adopt cost-effective insurance products aligned to firm needs, and strengthen fraud prevention frameworks. Policymakers are encouraged to support affordable insurance schemes, streamline claim settlement processes, and promote risk management capacity building among agribusiness firms.