Risk management practices and financial sustainability: evidence from savings and credit cooperative societies in Tanzania

Savings and Credit Cooperative Societies (SACCOS) are a crucial vehicle for financial inclusion and poverty reduction in emerging economies. However, their financial sustainability (FS) is threatened by issues such as liquidity constraints, loan defaults, and weak governance. Despite the identified FS’ drivers, the impact of risk management practices (RMPs) on Tanzanian SACCOS’ FS remains underexplored. This study investigates the influence of RMPs, specifically risk transparency (RT), risk identification (RI), and risk management culture (RMC) on Tanzanian SACCOS’ FS. The research was conducted from December 2024 to March 2025 using a cross-sectional approach. Data were collected through questionnaires administered to 228 licensed SACCOS managers and analysed using partial least squares structural equation modeling (PLS-SEM). The results show that RT, RI, and RMC positively and significantly influence FS, with RMC demonstrating the strongest effect. The findings guide SACCOS management to prioritise RI, RT, and RMC in governance during planning and implementing operational policies to improve FS. The study also suggests establishing specific risk management units and enabling policymakers and strategic partners to support, promote, and oversee RMPs that enhance SACCOS’ FS. Additionally, it extends agency theory by including cultural factors (RMC) and involving more stakeholders through RT in strengthening SACCOS governance.