Enterprise Risk Management Integration in Strategic Planning, and Performance of CPF Financial Services Limited in Kenya

Abstract

Integrating corporate strategy and enterprise risk management is critical for making informed business decisions for organizational performance. The motivation of the study was the potential of far-reaching consequences on an organization's value when its strategy is not aligned with its core values, vision, and purpose, as well as the consequences of the selected strategy. This study was on the financial pension services sector in Kenya. The study's objective was to establish the effect of ERM integration in strategic planning on the organizational performance of CPF Financial Services Ltd in Kenya. The environmental complexity theory anchored the study and was supported by stakeholder theory. This research applied a case study design. The researcher utilized primary data to accomplish the study's objectives collected using an unstructured interview guide. The interviews were conducted face-to-face at CPF Financial Services Limited's head office with four senior managers. This study applied content analysis to examine the information gathered, a qualitative research technique for classifying, organizing, analyzing, and reporting findings. The study findings established that CPF Financial Services Limited has an effective approach towards ERM that promotes a positive risk culture, articulates risk management strategies, enables designing of a risk governance structure, and enables a comprehensive and robust risk identification, assessment, and measurement. The study findings also established that CPF observes vital ERM best practices, including stakeholder involvement, communication, and enterprise-wide risk monitoring and assessment. The study also concludes that the Board of directors at CPF Financial Services Ltd is active in building and maintaining a risk management culture and assessing CPF's risk appetite. Further, the study determined that ERM integration in strategic planning at CPF Financial Services Ltd has positively affected the organization's performance. This was accomplished by lowering the risks of undesirable outcomes and, as a result, increasing the projected profits from CPF's initiatives or investments, informing decision making, safeguarding the company's image, and establishing the organization's positive risk culture. Based on the findings and the conclusions from the study, the following recommendations are made. First, the Board should continually assess the effectiveness of the enterprise risk management framework in place. Secondly, it is recommended that firms should enhance risk intelligence in the ERM process. The Board of directors should encourage risk transparency at all levels of the business so that day-to-day decision-makers are aware of the strategic objectives and how their actions may affect them. Lastly, the study also recommends that the Board, regulators, and policy makers ensure that firms in the financial services sector have an acceptable risk appetite to ensure that investors' money is not lost by taking too much risk.