Effect of institutional risk management framework on operational efficiency of commercial state corporations in Kenya

Abstract

This research was vindicated by the crucial mandate that institutional risk management frameworks (IRMF) serve in boosting the operational efficiency of Kenyan commercial state corporations. The organizations are indispensable national development drivers, entrusted with providing critical services, creating revenue, and boosting economic stability. IRMF refers to structured mechanisms that include risk identification, risk assessment, risk response, and risk monitoring and review. Nevertheless, majority are challenged with inadequate risk culture, insufficient top management support, inadequate resources, lack of training, and an absence of proper monitoring and evaluation frameworks. These gaps undermine their operational efficiency and sustainability. This research general objective was to establish institutional risk management frameworks effect on the operational efficiency of commercial state corporations in Kenya. The specific objectives were to establish the influence of risk identification, evaluate the effect of risk assessment, establish the effect of risk response, and examine the effect of risk monitoring on operational efficiency. The research was grounded in the Enterprise Risk Management Theory, Resource-Based View Theory, Contingency Theory, and Stakeholder Theory. A descriptive survey research design was employed in this research, targeting all 54 Kenyan commercial state corporations. The head of risk management or their equivalent in each corporation was the target respondents, justified by their pivotal role in implementing and overseeing risk management frameworks. Data was obtained via structured questionnaires and analyzed via descriptive, correlation, and multiple linear regression. The regression results discovered that institutional risk management frameworks significantly influence operational efficiency (R² = 0.941, F = 172.520, p < 0.000). Specifically, risk identification (β = 0.247, p = 0.005), risk assessment (β = 0.265, p = 0.012), risk response (β = 0.434, p = 0.001), and risk monitoring and review (β = 0.661, p = 0.000) all had positive and statistically significant effects on operational efficiency. These findings indicate that strengthening these four components can substantially enhance the performance of commercial state corporations. The research concluded that institutionalizing comprehensive and well-structured risk management practices significantly improves operational efficiency. It recommended that commercial state corporations enhance proactive risk identification, invest in robust risk assessment tools, implement timely and inclusive risk response strategies, and prioritize continuous risk monitoring and review. Further the research recommended adoption of real-time tracking systems, regular audits, and structured feedback mechanisms to ensure adaptability and accountability. Future studies may expand the scope to include risk governance and culture, use mixed methods, or focus on comparative sectors for broader insights.