Browsing by Author "Kamau, Virginia Mumbi"

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    Operational Risk Management Practices and Financial Performance of Commercial Banks In Nairobi City County, Kenya
    (Kenyatta University, 2025-11) Kamau, Virginia Mumbi
    Commercial banks in Nairobi City County have increasingly faced rising operational risks, including fraud incidents, regulatory breaches, system failures, and ineffective internal controls, which threatened their financial performance and long-term stability. These persistent challenges have created a pressing need to understand how operational risk management practices influences financial outcomes within the banking sector. This study examined the effect of operational risk management practices on the financial performance of commercial banks, focusing on risk mitigation, risk control, financial fraud management, and regulatory non-compliance practices. The following objectives guided the study in order to establish the effect of risk management strategies in finances of companies in Kenya; establish the effect of managing financial performance risk, establish effect of financial fraud on financial performance and finally to establish effect of non-financial risks. The study was anchored by agency theory, risk management theory and contingency theory. The study used a descriptive research design targeting 39 commercial banks in Nairobi City County. The unit of analysis was the commercial bank, while the unit of observation was managerial and non-managerial employees within these banks. Questionnaires were administered and validity analysis was performed, with reliability examined using Cronbach’s alpha. Primary data was collected and then recorded on a spread sheet, analyzed by assigning numerical codes and inputting the study data into SPSS version 23.0 computer software for statistical analysis. The descriptive statistics included frequency percentage ratios and standard deviations while the inferential statistics included correlation regression analysis. From the findings, risk mitigation practices had a significant positive effect on financial performance (p = 0.001, β = 0.45), indicating that a one-unit improvement in mitigation practices increased financial performance by 0.45 units. Risk control practices also had a significant positive effect (p = 0.005, β = 0.33), suggesting that stronger control mechanisms reduced inefficiencies and potential losses, enhancing financial performance. Financial fraud management practices recorded a correlation of 0.12 (p = 0.145), indicating a negative but statistically significant influence on performance, while Regulatory Non-compliance Practices showed a negative but insignificant effect (β = -0.07, p = 0.436), suggesting potential but non-significant harm to financial performance. Based on the findings, the study recommended that commercial banks should strengthen and institutionalize comprehensive risk mitigation and control strategies, enhance fraud detection mechanisms, and maintain strict regulatory compliance to safeguard assets and improve financial performance. These insights are valuable for bank managers, regulators, and policymakers seeking to enhance operational resilience and sustain profitability in a competitive financial environment.