The Impact of the Integrated Financial Risk Management on the Effectiveness of the Decisions of the Financial Leverage: An Empirical Study on the Insurance Companies in Kosovo

Among many decisions taken by business organizations, the most critical decision they take which affects the value of the company is that of the financial leverage. The designing of the decisions in a standard level of the financial leverage can be useful and at the same time harmful for the company. This study introduces a new approach called “Integrated financial risk management” which maximizes the effect of the organizational decisions. The management of the integrated financial risk aims at: improving the financial performance of the company, strengthening the stakeholders` communication and building a greater confidence in the market by providing real time data about the financial risks, decisions and the values of the organization, and finally approving and implementing a common framework about the risk inside the organization.
The process of the integrated financial risk management (IFRM) is designed and established by the company management and is implemented by the staff inside the organization. This is not a linear process; an IFRM may also have an effect on other risks and on control tools which are recognized as effective on the limitation of the risk. In short, this management of the financial risks effects on the efficiency of the financial leverages decisions.
This approach will have an impact on the increase of integration between strategic and operational standards inside and outside the country throughout the managerial hierarchy. In this study we will identify the relationship between the financial leverage and the performance of the insurance companies which are licensed by the Central Bank of Kosovo. This is an econometric study for the period from 2010 until 2014.

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