Project Risk Management Practices And Performance Of Core Banking System Projects In Selected Commercial Banks In Kenya

ABSTRACT

Commercial banks in Kenya often establish a risk management practice in their core banking system for improving the performance and increase the profits. Adoption of Core banking systems is widely complex and has often significant budgets, tight schedules and consume immense resources hence minimize risks linked to be treated as a priority to every project manager. The study examined the extent to which project risk management practices influences core banking system projects performance in selected commercial banks, in Kenya. The study was guided by the following specific objectives: to examine the influence of risk identification, risk analysis, risk response and monitoring on the performance of core banking systems. Theories guiding the study were portfolio theory, contingency theory and the triple constraint theory. A descriptive research design was utilized. The accessible population was 80 respondents comprising of 10 project managers from each bank. A census of 80 respondents was done to form the study sample size. Questionnaires were utilized to collect data. The collected data was quantitatively analysed using descriptive statistics and multiple regression analysis. The study found that risk identification, risk analysis, risk response and risk monitoring had a positive significance on project performance. The study concluded that identifying risk enables full risk analysis to be done and risk to be addressed and the project managers qualify risk based on likelihood and impact. Analysis of risks in core banking projects in commercial banks involves examining how project outcomes and objectives might change due to the impact of the risk event. The management of risk is critical to project success and it is the task of risk management to manage a project’s exposure to risk and risk monitoring and controlling or risk review is an iterative process that uses progress status reports and deliverable status to monitor and control risks. The study recommends that commercial banks should increase level of project risk identification as it enhances the risk management activities on each significant risk, project managers should establish the probability of risk occurrence in the project and its impact to determine the urgency of risk response planning and determine reporting levels, the response(s) to a given risk should reflect the risk type, the risk assessment in terms of likelihood, impact, criticality and so on and the organization’s attitude to risk, project managers should identifying new risks and plan for them, they should keep track of existing risks to check if reassessment of risks is necessary, any of risk conditions have been triggered and monitor any risks that could become more critical over time and tackle the remaining risks that require a longer-term, planned, and managed approach with risk action plans.