The Effect of risk management strategies on the organizational performance of oil companies in Kenya

Abstract

In recent years, risk management has become a priority for all sectors of the economy, so organizations can protect their interests while achieving their goals. Through risk management, organizations can ensure that it will achieve the desired results, reduce the impact of threats to acceptable levels, and increase opportunities to seize opportunities. The study was carried out to analyze the impact of risk management strategies on the organizational performance of oil companies in Kenya. The specific objectives were; to establish the effects risk acceptance strategies, risk transfer strategies, risk avoidance strategies and risk reduction strategies on performance of oil companies in Kenya. The study was guided by risk compensation theory and resource-based view. The study sampled 166 respondents from a target population of 284 employees. Data collected was analyzed using SPSS version 22.0. Inferential statistics using multiple regression and correlation analysis was applied to test the relationship between the independent variables and the dependent variable. The results of regression model expressed the hypothesized relationship between variables under study. Correlation analysis was used to determine the nature and magnitude of the relationship among the variables. The findings revealed a high positive relationship between risk acceptance, risk transfer, risk avoidance, risk reduction and organizational performance. The research also revealed that there is a high level of correlation between risk management strategies and organizational performance. The study concluded that effective management of risk is essential for any enterprise since it positively affects organizational performance. The study recommendations were as follows; oil companies should develop strategies to improve on risk management strategies and there should be adequate feasibility studies to bring out all the risks involved at any given time to prepare to mitigation. Lack of cooperation, filling of questionnaires within the stipulated and failure to give information were greatest limitation of the study when collecting data.