Effect Of Enterprise Risk Management On Performance Of Water Service Providers In Kenya

Abstract

The study of Enterprise Risk Management on water service providers is part of management strategic studies. Enterprise Risk Management studies have extensively been done on effects of risk management on performance of financial institutions, yet little have been done on effects of Enterprise Risk Management on performance of water service providers; and that was what motivated this study. The scope of the study was water service providers, addressing challenges such as ineffectiveness and inefficiency affecting quality service delivery to the customers against the constitution requirement of quality and quantity water for all. The major objective of the study was to investigate the effect of Enterprise Risk Management on performance of water service providers. Three variables namely operational risk management, financial risk management and corporate governance risk management on performance of water service providers were tested. The sample size was calculated using Krejcie and Morgan (1970) and got sample size of 185 staff and response rate of 81.08 %, which was above the acceptable rate. A reliability test was done to all the variables using cronbach’salpha, which requires that variable, should be above 0.7 a criteria that was met as follows; operational risk management 0.830, financial risk management 0.705, corporate governance risk management 0.855 and performance 0.838. The result of regression analysis showed that the three variables influenced the performance of water service providers by 48.6%. It also showed that all the variables had p-values of less than 0.5, which were significant. The study established an existence of significant between the variables and performance of Water Service Providers. Further findings reviewed that operational risk had the highest influence at 38.7% followed by financial risk management at 26% and corporate governance risk management at 13.2% on performance of water service providers. In summary, the research established that all the three variables had a significant positive effect on performance of water service providers in Kenya. This meant that an increase in any variable help to improve on water companies financial performance, operational efficiency and service delivery. The research recommends the institutionalization of a holistic risk management framework in which training, implementation and continuous review of the ERM in WSPs needs to be effected.