Factors Affecting Successful Implementation of Enterprise Risk Management in Kenyan Parastatals (A Case Study of Kenya Revenue Authority)

Abstract

Uncertainties present both risks and opportunities that enhance or reduce value. Enterprise Risk Management (ERM) seeks a balance to enhance value and has since become a key phenomenon in organizations in recent times. This study was carried out to investigate the factors affecting successful implementation of ERM in Kenyan parastatals a case study of KRA. Various studies have shown that implementation is not highly considered when organizations are looking at ERM. Most focus on it as part of social responsibility to their stakeholders and not as an integral part of strategic management. The general objective of the study was factors affecting successful implementation of ERM in Kenyan parastatals a case study of KRA. The specific objectives were; governance, organizational culture, organizational resources and communication. The theories used to build up literature review on ERM were; systems theory; organizational culture theory: stakeholder theory and communication theory. The conceptual framework indicated in a diagram how the dependent variable was related to the independent variables. The research was conducted using descriptive research design to explain the variables that affect the implementation of ERM. The target population was 210 KRA staff working in the ERM department at the head-office. The sample size was 136 KRA ERM staff. Stratified sampling was used to select relevant respondents from various sections of the ERM department of the organization. The questionnaire was administered using a drop and pick method and data collected was processed and analysed using SPSS version 22 and information generated presented in forms of graphs, charts and tables. To establish the relationship between the independent variables and the dependent variable the study conducted Karl Pearson's coefficient of correlation (r) in trying to show the relationship between the study variables and their findings. According to the findings, it was clear that there was a positive correlation between governance, organizational culture, organizational resources and communication shown by a correlation value of 0.966, 0.955, 0.943, and 0.881 respectively. This indicates that independent variables and dependent variable move in the same direction, that is, as one increases the other one also increases. From the findings R2 has a value of 0.947 meaning that the 94.7 % of the dependent variable can be explained or attributed to a combination of the four independent factors investigated in this study. A further 5.3 % of the successful implementation of ERM is attributed to other factors not investigated here. According to the regression equation established, taking all factors constant at zero, decision making as a result of these independent factors will be 9.845. The data shows that taking all other independent variables at zero, a unit increase in governance will lead to a 0.345 increase in the scores of successful implementation of ERM among Kenyan parastatals; a unit increase in organizational culture will lead to a 0.131 increase in successful implementation among Kenyan parastatals, a unit increase in organizational resources will lead to a 0.154 increase in the scores of successful implementation of ERM among Kenyan parastatals; and a unit increase in communication will lead to a 0.094 successful implementation of ERM among Kenyan parastatals. This therefore implies that all the four variables have a positive relationship with successful implementation of ERM with governance contributing most to the dependent variable. The study recommended that KRA should allocate adequate financial and human resources to help implement ERM.