In Kenya, the last few years has seen the performance of companies listed under the commercial and services segment on the Nairobi Securities Exchange (NSE), experience mixed fortunes. The study sought to assess the implications of financial risk on the performance of these companies. The study applied explanatory research design. The target population were the 14 companies listed under this segment of NSE. Secondary panel data contained in published annual reports for the period 2013–2017 was collected. Panel regression model was applied with the random effect model being used based on the Hausman specification test. Findings showed that credit risk had an insignificant positive effect on return on equity (ROE) while liquidity risk had a significantly negative effect on ROE and operational risk had a positive insignificant effect on ROE. The positive coefficients from the data analysis indicated that commercial and service companies at NSE were able to take in more credit to boost performance of these companies however the negative coefficients shows that within the period of study these companies experienced high liquidity problems in that the current liabilities exceeded the current assets. Thus, concluding that these companies were unable to pay all their obligation when they were due.

The study sought to assess the financial performance of the companies listed in the commercial and services sector at the Nairobi Securities Exchange (NSE), Kenya with an aim of determining the implications of firm size and operational risk on their performance. It was anchored on the agency theory. The study applied explanatory research design and the target population was the 14 companies listed under this sector. Secondary panel data contained in published annual reports for the year 2013 to 2017 was collected. A panel regression model was applied with the random effect model being used based on the Hausman specification test. Findings showed that operational risk had a positive insignificant effect on performance as proxied by return on assets (ROA). The findings further showed that firm size had a moderating effect on the relationship between operational risks and performance. It concluded that firm size played a role in the risk management of a company i.e. companies with higher total assets managed risk better than their counterpart. The study recommends that for companies to record improved financial performance, they needed to manage their operational risks by implementing risk management initiatives and increasing their total assets base.