Influence of Risk Analysis as a Risk Management Practice on Project Performance in Kenya Commercial Banks

Abstract

Undertaking an information technology project in a banking environment is a complex task. Studies globally and locally indicate a high failure rate of information technology projects. Standish group report 2019 states that 83.9 percent of information technology projects partially or completely fail. The majority of projects 52 percent were over budget, overdue, or lacked promised functionality. Previous studies indicate information technology projects in commercial Banks in Kenya experience the same project performance variations, as projects are either delayed, over budget or have issues with functionality. Risk is a factor that challenges project performance. Project risk management includes risk identification, analysis, response, and monitoring and control of risk in a project. The overall goal of this study was to examine the relationship of risk management and information technology project performance in Kenyan commercial banks, taking into account the moderating effect of project complexity and the mediating effect of risk culture, both of which had been largely overlooked in previous research hence filling a research vacuum. The target population was forty projects in Kenyan commercial banks in Kenya which made the unit of analysis. Stratified and simple random sampling technique was used. Stratified and simple random sampling technique was used. Questionnaires were used to collect the data from the targeted one hundred and eight respondents. The instrument was tested for reliability by use of Cronbach's alpha coefficient of internal consistency test and validity by use of selected information technology project professionals' review. Drop and pick method of administering questionnaires was used so as to allow respondents enough time to go through the questionnaires and give their responses. An option of online questionnaires was also available to respondents. Based on a survey, the research used both descriptive and explanatory analysis designs. The association between risk analysis and performance of information technology projects in Kenyan commercial banks was investigated using multiple regression. Quantitative data was analyzed using multiple regression analysis model software tool SPSS Version 25. The study adopted empirical model of least squares method while testing the hypotheses. The researcher conducted diagnostic tests of Normality, Linearity, Homoscedasticity and Multicollinearity to see if the data conforms to the basic assumptions of linear regression. The findings were presented using statistical parameter estimates. Tables and figures were used to present data, and supported by explanatory annotations. The results indicated that risk analysis had significant effects on the performance of information technology projects in the banking sector. The study recommends that banks should consider implementing and fully operationalize risk analysis in information technology projects. The Central Bank of Kenya should also consider putting in place an information technology projects risk policy framework to aid the banks in project undertakings. The finding in this research will aid project managers and different stakeholders in the banking and related sectors in managing information technology projects risks and hence increase the success rate of the projects. The knowledge gap is also addressed by scholarly work that has resulted from this research by providing statistical data analysis and explanations on the IT project performance in relation to risk analysis influence in commercial banks in Kenya.