Nigerian Journal of Banking and Financial Issues (NJBFI)

Forensic Accounting And Risk Mitigation In The Nigerian Insurance Industry

Abstract

This study examined the impact of forensic accounting on risk mitigation within the Nigerian insurance industry, employing a descriptive survey design. Targeting professionals in accounting, auditing, risk management, and compliance roles at AIICO and AXA Mansard Insurance Companies' Lagos and Ibadan branch offices, the research utilized a stratified random sampling technique to select a representative sample of 120 respondents. Data were collected using a self-developed instrument, the “Forensic Accounting and Risk Mitigation in the Nigerian Insurance Industry Questionnaire” (FARMNIQ). The analysis focused forensic accounting using three indices: fraud detection and prevention rates, regulatory compliance adherence, and internal control systems to assess risk mitigation. Results indicated a significant positive impact of fraud detection and prevention rates and regulatory compliance adherence on risk mitigation, with coefficients of 0.45 and 0.32, respectively. However, internal control systems showed a less pronounced effect, with a coefficient of 0.28 and a p-value of 0.065, suggesting a non-significant influence at the 0.05 level. The study concluded that robust fraud detection mechanisms and strict regulatory compliance are crucial for enhancing risk management strategies. Recommendations include the implementation of comprehensive forensic accounting practices and ongoing staff training, alongside stringent regulatory oversight to strengthen the industry’s risk mitigation efforts.