Relationship Between Enterprise Risk Management Practices and the Financial Performance Among Commercial State Corporations in Kenya
Abstract
This study sought to establish the relationship between ERM practices and Financial
Performance among Commercial State Corporations in Kenya. Specifically, the study aimed at
establishing the influence of Operational risk management practices, Strategic risk management
practices, Financial risk management practices and Governance risk management practices on
the Financial Performance of Commercial State Corporations in Kenya.The underpinning
theories of the study included; the Modern Portfolio Theory, Modigliani and Miller Proposition
and the Capital Assets Pricing Model (CAPM)
The study used a descriptive research design and the target population comprised of all the 55
Commercial SC in Kenya. Quantitative and qualitative data was collected using a semistructured
questionnaire. Quantitative data was collected for a period of 5 years from 2010-2014
and analyzed using descriptive statistics and factor analysis while qualitative data was analyzed
using content analysis.
The results of the study indicated that Operational, Strategic, Financial risk and Governance risk
Management Practices had positive effects on the Financial Performance of Commercial SCs to
an extent of 70%, 71%, 66% and 72% respectively.
The study concludes that Enterprise Risk Management Practices influence the Financial
Performance of Commercial SCs in Kenya to a very large extent. The study recommends that all
the Commercial SCs in Kenya employ robust Enterprise Risk Management practices, fully
implement their ERM frameworks and on a frequent basis evaluate the Enterprise Risk
Management Practices and the Government to encourage more firms to institute ERM practices
as well as create more awareness on the need for the same in all organisations.
Publisher
University of Nairobi