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The main purpose and focus of this study was to investigate and bring to limelight the roles of insurance company in management of risk in medium scale organization. The researcher used Usmer water ventures located at No. 2 Hospital Lane Uyo, Akwa Ibom State for her study. In order to achieve the objectives of the study, seven (7) research questions and five (5) hypothesis were formulated to give a proper guide to the study, literature that were related to the variables of the topic under study were reviewed stated according to the hypothesis for the study. The researcher underwent descriptive research as she conducts the study. The sample size of the study was taken from the original samples of the population which was 28. As veritable tools for data collection, questionnaire, observation and interview were used for data collection. Chi-square analysis was used to test the hypothesis and arrived at reasonable conclusion and solution. Based on the findings of this study, it was recommended that management of business organization should not overlook the insurance of their business because that is the only way risk and uncertainties can be managed and controlled.


Cover page

Title page

Declaration – – – – – – – i

Certification – – – – – – – ii

Dedication – – – – – – – iii

Acknowledgments – – – – – – iv

Abstract – – – – – – – – vi

Table of Contents – – – – – – vii


1.1 Background of the Study – – – – 1

1.2 Statement of Problem – – – – 6

1.3 Objective of the Study – – – – 7

1.4 Research Questions – – – – – 8

1.5 Research Hypotheses – – – – 9

1.6 Significance of the Study – – – – 9

1.7 Scope of the Study – – – – – 11

1.8 Limitation of the Study – – – – 11

1.9 Definition of Terms – – – – – 12


2.1 Brief Introduction – – – – – 14

2.2 Theoretical Framework – – – – 15

2.2.1 Historical Development of Insurance Business in Nigeria – – – – – – – 15

2.2.2 The Concept of Insurance and Risk – 17

2.2.3 Various types of Risk in Medium Scale Organization – – – – – – – – – 20

2.2.4 Various Insurance cover available for small and Medium Scale Organization – – – 21

2.3 Review of Current Literature – – 23

2.3.1 Challenges of Insurance Practitioners – 24

2.3.2 Management of Risk – – – – 28

2.3.3 Problems facing Insurance Company in Management of Risk in Medium Scale Organization – 30


3.1 Brief Introduction – – – – – 33

3.2 Area of the Study – – – – – 33

3.3 Research Design – – – – – 34

3.4 Population of the Study – – – – 34

3.5 Sample Size and Sampling Techniques – 35

3.6 Method of Data Collection – – – 35

3.7 Description of Instrument for Data collection- 36

3.8 Method of Data Analysis – – – – 37

3.9 Decision Rule – – – – – – 38


4.1 Brief Introduction – – – – – 39

4.2 Analysis of Questionnaire Administered – 39

4.3 Analysis of Responses According to Research Questions – – – – – – – 45

4.4 Test of Hypotheses – – – – – 52


5.1 Brief Introduction – – – – – 66

5.2 Summary of the Study – – – – 66

5.3 Conclusions – – – – – – 67

5.4 Recommendations – – – – – 68





1.1 Background of the Study

Every purposeful and responsible enterprise quest is to improve and succeed in its prospection objective and for any business establishment to venture into achieving her goals and objectives must first and foremost take precautions in other to even though not to totally eradicate dangers and uncertainties that may subsequently come up will go a long way to limit it and its effects. It is at this point that a risk manager comes in to bring in ways in which risk could be managed in order to efficiently run and to achieve the organizational goals and objectives.

As we are in a business society one of the important thing most managers should have at the back of their mind is that there is no business enterprise that is free of risk, it certainly face some degree of risk, and some of the risk are controllable with respect to the appropriate taken against it whereas some are largely unpredictable. Before looking at the meaning of “risk management” it will be important to briefly examine the concept of risks. ISO 3100- International Organization for Standardization (2009) defined and summarized risk as the probability and/or impact of unfortunate events or the likelihood of loss. It went further to say that risks can be found anywhere from financial markets, project natural causes, securities, industrial processes, health, science experiments and so forth, therefore, risk ought to be managed in order to minimize the realization of unwanted opportunities.

Risk management is defined as a systematic process of identifying and assessing organization risks and taking actions to protect the firm against them (Encyclopedia of management) ISO 3100 (2009), want ahead to defined risk management as the identification, assessment and prioritization of risk followed by coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of unfortunate event or to maximize the realization of opportunities. Risk management is a functional management process or transfer mechanism of identification, evaluation earnings of a business or other enterprise with minimum cost and maximum efficiency.

In a paper presented by “Insurance Training Centre” Ogere Ogun state dated April, 1987 titled “scope of risk management extend beyond mere handling of insurance risk, it does encompasses, the management of all types of risk. Risk management is concerned with formulating some forms of defensive strategy, which takes account of organizational assets and objectives. This price of work will initially examined the various mechanism employed by Anchor Insurance company in the Assessment of risk. These include:

Process of identification
Monitoring and controlling of such risk

The Identification of risk will include information on the proposal which reveals the physical and morale hazards of the subject matter of insurance.
The evaluation of risk views placement of value on the identified risks, which threatens a corporate assets. The monitoring and control of risk highlights the physical and financial control of risk that threatens assets.

The centre piece of this work will be to thoroughly analyze various means of identifying corporate objectives. These will include retention, reduction and transfer of risk. Also, taking steps pre-loss and post loss objectives and the procedure for transfer and reduction of loss. The entire work of this piece will be comprehensively packaged by ascertaining various hazards and inherent liabilities present at the risk and make recommendations based on experts opinion to enable underwriter to decide whether the risk offered is acceptable at standard rate or otherwise. Finally, this work will also suggest ways and means for prudent risk management is respect with those risks that corporate bodies like Anchor Insurance Company as an entity is faced with and bring about reduction to loss exposure.

1.2 Statement of the Problem

The major problem of this research work is centered on how to reduce risk in Usmer Water which will in turn enhance its development and also aids its management in successfully achieve their prospective objectives. Furthermore, the research work has communication shows as one of the most important aspect of the challenge. This is because it has to do with management as an efficient means of achieving corporate objectives of small and medium scale business and also the quest to achieving objective and maximizing risk is its most vocal point.

In addition to these challenges and constrains, lack of technical know-how could be said to be another major problems confronting Usmer Water. As an efficient means of achieving corporate objectives does not easily manifest or come to lime light because basic insurance information sometimes does not reach most managers due to their lack of enterprise, and most managers due to their lack of expertise fail to go into research to source for information that will effectively aid the organization in taking a cover against these risk and uncertainties that might come up and pronounce the challenge faced in risk management in Usmer water and also the challenges of insurance practitioners (risk managers) in making Usmer water a better and improved company by providing ways and means of curbing risks in mentioned enterprise so as to improve its development and growth.

1.3 objectives of the Study

1. To find out if there is risk management in Usmer Water.
2. To find out the challenges Usmer Water faced in risk management
3. To examine the contribution of insurance company in managing of risk in Usmer Water.
4. To find out the insurance plan in regards to Usmer Water
5. To ascertained if there is any damage as a result of lack of risk management.

1.4 Research Questions

For the purpose of this study, the following research questions have been proposed by the researcher.

1. Is there insurance management in Usmer Water?
2. What are the challenges faced in risk management in Usmer Water?
3. What are the contributions of this insurance company since the registration of Usmer Water Company?
4. What are the insurance plans like in Usmer Water?

1.5 Research Hypotheses

Ho: There is no significant relationship between risk management and Usmer Water.

Ho: There is no significant relationship between risk challenges and Usmer Water.

Ho: There is no contribution between insurance company and Usmer Water.

Ho: There is no significant insurance policy and Usmer Water

Ho: There is no significant damages in Usmer Water and failures in risk management.

1.6 Significance of the Study

If this project was not intelligible enough it could not have been approved, the project supervisor and the researcher believed that some people will benefit from this project topic when it is properly done. Having know the important role the insurance company play in management of risk in most medium scale businesses, this study is therefore meant to show that is inevitable for a business organization to function without a back-up or support in case something gets wrong in the long run.

However, the important of this research to management of any organization both profit and non-profit organizations, students both graduate and undergraduate will not be over emphasized. Generally, everybody, all business enterprise that want to survive in these ever dynamic business world must learn to plan and associate themselves with insurance company for it serves as a platform of support which they will fall back to in case any risk comes up later in the future.

1.7 Scope of the Study

The area of this study was limited to Usmer Water in no. 2 Hospital Lane, Uyo, Akwa Ibom State. The reason this case study was chosen because of its proximity and nearness to the capital city of Uyo which is populated with so many good business and well distribution outlets. Another reason for limiting the study to Uyo was to meet up with time and also to reduce the financial constraints.

1.8 Limitation of the Study

During the time of this research work, there were many impediments I encountered, and such impediments are:

Time: This is a major factor I encountered as I was going through this work. There were many responsibilities I had to take care of, such as my class assignment, attending classes, taking test and especially in the areas of data collection and other relevant information which would aid me in writing this project so there was limited.
Finance: Inadequate finance has always been a problem to any student especially those who are sponsoring themselves. These research work would have been ready in time had it been I had enough money to acquire all the necessary data needed to complete this research work.

1.9 Definition of Terms

In this area of the research work, certain key words are summarized.

Risk: A situation of uncertainty as to the outcome of an event.
Risk Management: The process involving identification measurement and economic control of risk that threatens the assets and profits of a business enterprise.
Insurance: A legal way of protecting your properties, life etc, against loss or harm arising unexpectedly in consideration of a payment proportionate to the risk involved.
Enterprise: A business entity or organization
Hazard: A physical or mortal features that cause damages.
Survey: An inspection of premises or property proposed for insurance.
Objectives: A goal one has set to achieve in future.
Management: The act of running and controlling the affairs of business.
Evaluation: The act of forming an opinion of the amount, value or quality of something after thinking about it careful.

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