Allocation of resources for risk management activities by business organisations in developing countries: Evidence from Zambia




Risk management, Risk Resource Allocation, Zambia, Developing Countries


This study evaluates resources allocated for risk management by business organisations (financial and non-financial firms) in developing countries, using Zambia as a case study. Primary data collected from 158 organisations were analysed using MegaStat. The findings revealed that the majority (54.5%) of organisations, especially non-financial institutions, only commit resources to risk mitigation on an Adhoc or post-event basis, while 45.5% showed a budgeted approach. A significant part of the budgeted 45.5% was used for risk management activities, and 54.5% was used for regular daily operations. Despite this variation, all organisations engaged reported a significant expenditure on risk management, at least on Adhoc. At 4 degrees of freedom (df), which was one less than the total number of possible outcomes, a non-parametric test for significance yielded a scientific P-value of 1.57e-0.7, (a numerical magnitude of 0.0014, P< 0.05). This suggests that the correlation and pattern of the findings were not random or by chance, but they carried a statistical significance. The study's main findings demonstrate that some business organisations in Zambia and other developing countries incur significant expenditure with a higher portion of their budgets to respond to risk management needs. Business organisations which do not have formal risk structures do so informally due to pressure from emerging business risks. The findings also indicated that financial institutions in developing countries allocate more resources towards risk management than non-financial institutions. The Phi coefficient (degree of association) was 0.486, showing a moderately significant relationship between the variables (risk management and resource allocation). Business organisations in Zambia and other developing nations must develop sound risk mitigation plans and allocate resources for risk management.


Download data is not yet available.

Author Biography

Olajide Solomon Fadun, Department of Actuarial Science and Insurance, Faculty of Management Sciences, University of Lagos, Akoka Lagos, Nigeria

Department of Actuarial Science and Insurance

Faculty of Management Sciences

University of Lagos, Akoka Lagos, Nigeria


Abbas, S., Haider, S., Zainab, F., Hassan, H., & Fazal, A. (2018). Why remodelling of risk management Practices in banking is required. Evidence from Pakistan. International Journal of Scientific & Engineering Research, 9(2), 686-691. DOI:

Ahmad, H., & Muslim, M. (2022). Several factors affecting firm value manufacturing in Indonesia. Jurnal Akuntansi, 26(1), 127-143. DOI:

Andersen, T. J. (2008). The performance relationship of effective risk management: Exploring the firm-Specific investment rationale. Long Range Planning, 41(2), 155–176. DOI:

Bailey, C. (2019). The relationship between chief risk officer expertise, ERM quality, and firm performance. Journal of Accounting, Auditing & Finance, 37(1), 1–25. DOI:

Bjornsdottir, S. H., Jensson, P., de Boer, R. J., & Thorsteinsson, S. E. (2022). The importance of risk management: What is missing in ISO standards? Risk Analysis, 42(4), 659-691. DOI:

Cavusgil, S. T. (2022). Megatrends and international business. In Megatrends in international business (pp. 11-21). Cham: Palgrave Macmillan. DOI:

Chen, X., Chong, W. F., Feng, R., & Zhang, L. (2021). Pandemic risk management: resources contingency planning and allocation. Insurance: Mathematics and Economics, 101, 359-383. DOI:

Fadun, O. S. (2013). Promoting enterprise risk management adoption in business enterprises: Implications and challenges. International Journal of Business and Management Invention, 2(1), 69-78.

Fadun, O. S., & Oye, D. (2020a). Impacts of Operational Risk Management on Financial Performance: A Case of Commercial Banks in Nigeria. International Journal of Finance & Banking Studies, 9(1), 22-35. DOI:

Fadun, O. S., & Oye, D. (2020b). The analysis of drivers of operational risks in Nigerian commercial banks. Bussecon Review of Finance & Banking, 2(2), 19-35. DOI:

Faisal, F., Abidin, Z., & Haryanto, H. (2021). Enterprise risk management (ERM) and firm value: The mediating role of investment decisions. Cogent Economics & Finance, 9(1), 1-15. DOI:

Farrell, M., & Gallagher, R. (2015). The valuation implications of enterprise risk management maturity. Journal of Risk and Insurance, 82(3), 625–657. DOI:

Florio, C., & Leoni, G. (2017). Enterprise risk management and firm performance: the Italian case. The British Accounting Review, 49(1), 56-74. DOI:

Fraser, J. R., & Simkins, B. J. (2016). The challenges of and solutions for implementing enterprise risk management. Business Horizons, 59(6), 689-698. DOI:

Gallati, R. R. (2022). Risk management and capital adequacy. London: McGraw-Hill.

Gordon, L. A., Loeb, M. P., & Tseng, C. Y. (2009). Enterprise risk management and firm performance: A contingency perspective. Journal of accounting and public policy, 28(4), 301-327. DOI:

Harvey, C. R. (1991). The world price of covariance risk. The Journal of Finance, 46(1), 111-157. DOI:

Hoyt, R. E., & Liebenberg, A. P. (2011). The value of enterprise risk management. Journal of Risk and Insurance, 78(4), 795–822. 01413.x DOI:

Jankensgård, H. (2019). A theory of enterprise risk management. Corporate Governance:

The International Journal of Business in Society, 19(3), 565-579. 2018-0092 DOI:

Jensen, M. C. & Meckling, W.H. (1976). Theory of the firm: Managerial behaviour, agency costs, and ownership structure. Journal of Financial Economics, 3 (4), 305-360. DOI:

Jonek-Kowalska, I. (2022). Endogenous determinants of risk management effectiveness. In: effectiveness of enterprise risk management (pp. 35-51). Palgrave Macmillan, Cham. DOI:

Kaplan, R. S., & Mikes, A. (2016). Risk management: The revealing hand. Journal of Applied Corporate Finance, 28(1), 8-18. DOI:

Kulkarni, V. (2017). Contingency Theory. The International Encyclopaedia of Organisational Communication, 16(2), 1-6. DOI:

Klingler, S. (2019). High Funding Risk, Low Return. Low Return (August 30, 2019). DOI:

Mikes, A., & Kaplan, R. S. (2014, October). Towards a contingency theory of enterprise risk management. AAA. DOI:

Mthiyane, Z. F., Huibrecht, M. V. P. & Makgopa, F. T. (2022). A framework for risk management in small medium enterprises in developing countries. Risks, 10(173), 1-18. DOI:

Musonda, K. (2020). A critical analysis of the internal risk management practices of the commercial banks in Zambia: A case study of the Zambia National Commercial Bank. Lusaka: Cavendish University.

Mwila, B. (2018). Disaster risk preparedness strategies against fire in urban markets in Zambia: a case study of Chisokone market in Kitwe (Doctoral dissertation).

Myamba, B. M., & Nguni, W. S. (2022). Aligning the risk hedging strategy with supplier collaboration and manufacturing competitiveness: A resource-based and contingency approach. International Journal of Productivity and Performance Management. Vol. ahead-of-print, No. ahead-of-print. DOI:

Penrose, E. T. (1959). The Theory of the Growth of the Firm. John Wiley & Sons Inc.

Prewett, K., & Terry, A. (2018). COSO’s updated enterprise risk management framework: A quest for depth and clarity. Journal of Corporate Accounting & Finance, 29(3), 16–23. DOI:

Silva, J. R., Silva, A. F. D., & Chan, B. L. (2019). Enterprise risk management and firm value: Evidence from Brazil. Emerging Markets Finance and Trade, 55(3), 687-703. DOI:

Silva, M. Z., & Fernandes, F. C. (2019). The influence of contingencies factors strategy and structure in the enterprise risk management in a hospital. Gestão & Produção, 26(1). DOI:

Smith, C.W. & Stulz, R.M. (1985). The determinants of firms' hedging policies. Journal of Financial & Quantitative Analysis, 20 (4), 391- 405. DOI:

Tufano, P. (1998). Agency costs of corporate risk management. Financial Management, 27(1), 67-77. DOI:

Tursoy, T. (2018). Risk management process in the banking industry. Near East London: Munich Personal RePEc Archive (MPRA).

Yaakov, Y. B., Wang, X., Meyer, J., & An, B. (2019). Choosing protection: User investments in security measures for cyber risk management. In International Conference on Decision and Game Theory for Security, 33-44. Springer, Cham. DOI:

Zungu, S., Sibanda, M., & Rajaram, R. (2018). The effect of the enterprise risk management quality on firm risks: A case of the South African mining sector. African Journal of Business and Economic Research, 13(1), 115-133. DOI:

Zuo, F., Zio, E., & Yuan, Y. (2022). Risk-Response strategy optimization considering limited risk-related resource allocation and scheduling. Journal of Construction Engineering and Management, 148(11), 04022123. Available at: DOI:




How to Cite

Silwimba, P., & Fadun, O. S. (2023). Allocation of resources for risk management activities by business organisations in developing countries: Evidence from Zambia. Bussecon Review of Social Sciences (2687-2285), 4(2), 15–24.



Interdisciplinary Studies