Risk management and firm performance: the role of dynamic capability and risk management culture

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Risk management is increasingly recognized as a critical factor influencing firm performance and competitiveness. Motivated by the complex yet critical relationship between risk management and firm outcomes, this study aimed to examine the impacts of risk management practices and risk culture on firm performance, focusing on mining firms in Ghana. The study is grounded in the resource-based view and dynamic capability theories. Using a quantitative approach, data was gathered from a sample of 133 employees of mining firms in Ghana and analyzed with structural equation modeling. Key findings reveal that while risk management alone does not directly enhance firm performance, the presence of a strong risk management culture significantly improves the effectiveness of risk management practices in driving performance. The study concludes that mining firms seeking to boost performance should invest in robust risk management systems and consciously nurture a risk-aware culture. This will equip them to better capitalize on opportunities and sustain competitiveness amidst myriad risks. The research contributes valuable empirical insights on the integral, nuanced role of risk management culture in translating risk management into improved firm performance. Based on the findings, recommendations include developing educational programs to promote risk awareness across organizations and creating open channels for communication about risk to nurture a supportive risk management culture. The study's focus on the mining industry in Ghana may limit generalizability, while the cross-sectional quantitative approach provides limited insights into the temporal dynamics of risk management. Further research could employ longitudinal and qualitative approaches across industries and regions. Overall, the study underscores the importance of an integrative approach encompassing risk management practices, culture and capabilities for long-term success amidst uncertainty.
Thesis submitted to the department of supply chain and information s systems, knust school of business, in partial fulfillment of the requirement for the award of the degree of msc. Business administration (procurement and supply chain management)