The role of risk management in increasing business performance

Abstract

The study aims at clarifying the role of risk management in improving business performance. In this study a literature review has been employed in order to understand the subject matters in managing business risks to increase company performance. The literature reviewed shows that risk management does contribute to the improvement of the business performance, measured as increase of company profits, decrease of business costs and, in turns, increase in economic proficiency. Therefore, the risk management impacts, in a positive way, the quality of a business that is embodied in improving the financial status of the company, increasing the profits, as well as decreasing the costs. Some recommendations are made for decision makers in the insurance business sector, who are required to be fully aware of the influence that risk management has on helping their business flourish. This is advisable through decreasing the cost of production, increasing profits, and improving financial business situation in their companies. Also, company decision makers are required to work continuously to develop risk management to increase profits, reduce costs, and improve the financial situation, and thus improve business performance.