An Appraisal of IT Portfolio as a Risk Management Tool in the Finance Department NWPG: Factor Analytic Approach

Abstract

Information technologies have long been considered as either business drivers or enablers. In some cases however, it can be an inhibitor or risk factor. It is therefore prudent for organizations to have proper alignment of their Information Technology (IT) strategies with business strategies in order to reap the benefits of IT. More importantly, organizations must be able to assess the role played by IT as a risk factor and couple that with positive role as a risk management tool. This study investigated both the positive and negative roles of IT in the Department of Finance, North West Provincial Government (NWPG) of South Africa. This was motivated by the fact that there have been several reported cases of money laundering and misappropriation of funds in this department. This has attributed to the failure of NWPG to assess the duality of context in their IT portfolio. Quantitative measures such as the descriptive and exploratory factor analysis were used in this study. Questionnaires were distributed to employees of the department and a return rate of 72% was achieved. Factor analysis results revealed 15 items that can be grouped and explained by two factors namely, operational aspects (technical issues) and business aspects (business issues) of IT. The results also noted that the department has feasible resources to manage its risk using IT as a tool. The challenge however is the lack of neither measures nor awareness programmes to manage the risk that can be associated with IT portfolio. These measures include making employees aware of the risk control measures, reporting procedures and IT risk factors in their department. DOI: 10.5901/mjss.2014.v5n14p113