Effect of Risk Management on the Financial Performance of Food and Beverage Industries in Nigeria

Abstract

This paper aims to examine the effect of risk management on the performance of food and beverages company in Nigeria, in apply this, proxies were introduced (operational and liquidity risk) to examine their effect on the financial performance of food and beverages company in Nigeria. The study adopts ex-post facto and time series research design by employing the Augmented Dickey- Fuller Test (ADF) method of data analysis and co-integrated regression analysis methods were used. The study covers (10) Ten listed of food and beverages company quoted in the Nigeria Stock Exchange for the period of 2010-2021.The research findings reveal that operational risk and liquidity risk have negative relationships with the return on asset, but insignificant impacts on return on asset and also the regression also showed that operational risk and liquidity risk have no significant effect on the return on asset (ROA) within the periods under study. However, the management of the study company should ensure that the operational risk and liquidity risk are properly managed having seen that the variables have negative impact on the return on asset, also considering the negative relationship but insignificant impact of operational risk and liquidity risk on the performance of food and beverages, it is pertinent that the financial regulatory authorities concerned in the company should review the prevailing state of the company, in order to ease the financial irregularities in the company.