Risk and Profitability Synergy: Evaluating Igara Tea Factory Ltd’s Financial Performance in Uganda

Abstract

Financial performance serves as a vital measure of organizational success, particularly within the agricultural sector, where various external elements can influence profitability. This research focused on risk assessment strategies at Igara Tea Factory Ltd in Uganda and examined how these strategies impact financial performance. The study was grounded in Risk Management Theory and employed a quantitative research approach, utilizing a correlational research design. The population consisted of 58 individuals, and a sample size of 50 respondents was determined using Slovin’s formula. Sampling methods included purposive, stratified, and simple random sampling to select participants. Data collection was done through structured, self-administered questionnaires, with questions framed on a Likert scale ranging from 1 to 5. A pilot test, conducted with 5 respondents, was used to assess the validity and reliability of the questionnaire items. Descriptive and inferential statistics were applied during data analysis, which involved computing simple linear regression and Pearson correlation using SPSS Version 25. Results showed an insignificant positive relationship between risk assessment and financial performance (t=1.869, p=.063, p>0.05). The findings indicated that while risk assessment is positively linked to financial performance in tea firms, the relationship is not statistically significant (t=2.091, p=0.063>0.05), implying that risk assessment alone may not strongly predict financial success. The recommendation is for tea firms to incorporate additional strategic elements such as market analysis and operational efficiency improvements alongside risk assessment to boost financial performance. The relevance of this study to policymakers is the realization that, while risk assessment contributes positively to financial outcomes, it may not be sufficient by itself to achieve substantial financial success, underscoring the need for policies that include complementary strategies.