The Effect Of Risk Management Strategies On The Sustainable Competitive Advantage Of Commercial Banks In Kenya

Abstract

Commercial banks are exposed to a variety of risks during the conduct of their business. This is a serious threat to their sustainable competitive advantage. Banks that intend to survive and thrive can use risk management as an opportunity towards sustainable competitive advantage. The objective of this study was to examine the effect of risk management strategies on the sustainable competitive advantage of commercial banks in Kenya. The study focused on how risk avoidance strategies, risk transferring strategies and risk absorption strategies impact on the sustainable competencies of commercial banks in Kenya. The study adopted a descriptive research design that employed survey methods. Data were collected using self-administered questionnaires. The target population was the risk managers of all the 43 commercial banks in Kenya, however, only 38 risk managers participated in the study. Data were analyzed using mean, standard deviation and regression analysis. The findings showed that risk avoidance strategies positively but insignificantly affected sustainable competitive advantage. The findings also showed that risk transferring strategies had a positive but insignificant effect on sustainable competitive advantage. Further, risk absorption strategies positively and significantly contribute to sustainable competitive advantage. The study recommends the strengthening of the use of risk avoidance strategies, risk transferring strategies and risk absorption strategies to sustainable competitive advantage. Commercial banks should strive to turn risk management into a source of sustainable competitive advantage.