1. EFFECTS OF ENTERPRISE RISK
MANAGEMENT STRATEGIES ON THE
GROWTH OF REAL ESTATE FIRMS IN
KENYA
Presented by
KEVIN MBURU KURIA
(HD433-COO5-3583/2013)
Supervised by
Dr. Fridah & Dr.Ahmed
Jomo Kenyatta University of Agriculture and
Technology 1

2. BACKGROUND OF THE STUDY
• Enterprise risk management (ERM) refers to the joint management of firm risk using
multiple risk management techniques and considering the interrelations or correlation
between risk exposures.
• Rather than focusing on traditional risk management (insurance buying, physical
mitigation, liability reduction) or financial risk management (purchasing options and
derivatives, diversifying investments), enterprise risk management simultaneously
considers all forms of firm risk, the interrelatedness of the risks, and creates a plan to
treat overall firm risk.
• ERM researchers and risk management consultants typically define four sources of
firm risk: financial, operational, hazard, and strategic (Ai, Brocket, Cooper and
Golden, 2011). 2

3. BACKGROUND OF THE STUDY
• The real life experiences substantiate the assumption that no matter how sophisticated and
modern the business activities of the organization may become, it will be extremely
difficult to sustain its growth and effectiveness unless there are strategies that complement
its operations (Wright, 2005).
• The frequent and uncertain changes, greater competition between firms, the need for
continuous innovations, quality enhancement and cost reduction force companies to face
the challenge of improving their competitiveness and consequently their performance.
• This realization has propelled strategic management as a major field of study and the
renewed interest has facilitated the development of newer approaches in managing
organizations (Wright, 2005).
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4. BACKGROUND OF THE STUDY
• Although it has been demonstrated that strategy management can improve business
performance, it has also been acknowledged that environmental uncertainties might affect
the postulated relationship (Day & Wensley, 2008; Kohli & Jaworski, 2010).
•Carpano, Chrisman, and Roth (2004) stated that, depending on the competitive situation
that firm’s face, the performance of firms following a particular strategy can vary.
•There are several checkpoints that have considerably driven the need for enterprise risk
management, this includes increase in Greater transparency (Corporate Governance),
Financial disclosures with more strict reporting and control requirement, Security and
technology issues, Business continuity and disaster preparedness, Focus from rating
agencies, Regulatory compliance (laws and regulations) and globalization in a
continuously competitive environment (SOA, 2009).
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5. PROBLEM STATEMENT
• Given the ever dynamic and challenging business environment, real estate sector
is bound to be exposed to various risks. The problem is that real estate
companies that do not adapt and/or institutionalize ERM strategies are likely to
witness poor growth patterns compared with those that adapt ERM.
• The poor growth or failure of the real estate sector may lead to serious negative
consequences as far as the achievement of Vision 2030 is concerned owing to
the important role real estate companies are expected to play in providing
affordable housing for citizens.
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6. PROBLEM STATEMENT
• A number of studies have been conducted on risk management by companies in
Kenya but little has been studied on real estate industry. A study on the effect of
risk management practices on the financial performance of commercial banks in
Kenya by Mwangi (2010) showed evidence that risk management and the
related practices are considered significantly important to the operations and
financial performance of these commercial banking institutions.
• Kinyua (2010) assessed risk as a component of corporate strategy in selected life
insurance companies in Kenya and found out that insurance companies faced
competitor, regulation and de-regulation risk and industry economics and
recommended that insurance companies should deploy strategic planning tools
to give the firms an all-inclusive perspective of strategic planning.
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7. PROBLEM STATEMENT
• Njoroge (2013) also conducted a research on the strategic risk
management practices by AAR Insurance Kenya Limited showed
that reputational risk is significant in insurance companies.
• Based on the study findings there is scarcity of studies on effect of
enterprise risk management on growth of real estate sector in
Kenya. The current research hopes to bridge all these research
gaps by analyzing the effect of enterprise risk management on the
growth of real estate sector in Kenya.
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8. OBJECTIVES OF THE STUDY
General Objective
• This study seeks to establish the effects of enterprise risk management strategies
on the growth of real estate sector in Kenya.
Specific Objectives
• To investigate whether financial risk management strategies lead to growth of real
estate sector in Kenya.
• To establish whether operational risk management strategies lead to growth of
real estate sector in Kenya
• To determine whether the regulatory risk management strategies contribute to
growth of real estate sector in Kenya
• To establish whether strategic risk management strategies contribute to growth of
real estate sector in Kenya
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9. CONCEPTUAL FRAMEWORK
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Financial Risk management
• Liquidity-Risk of not meeting liabilities to
clients, creditors and investors
•Inefficiency
Operational Risk Management
•Internal control framework comprising of
policies and procedures,
• Technology to reduce human error
Growth of Real Estate Sector
•Increase in market share
-Increase in assets
-Boom in property development
-Increased profitability
-Many players in the market
Regulatory Risk Management
•Establishing a good working relationship with the
authorities
• Open communication with regulators
Strategic Risk Management
•Assessing whether clients’ enterprises have
negative environmental or social effects
•Communication and transparency
•Governance in form of effective board
systems

10. METHODOLOGY
ITEM DESCRIPTION
Research
Design
•Correlational survey research design.
•A survey research design is an attempt to collect data from the
members of a population in order to determine the current status of
that population with respect to one or more variables
Population •The population of this study will be all the 69 firms real estate
firms spread across the country
Sampling
Design
• This study will use purposive sampling to select the managers.
• According to Mugenda and Mugenda (2003) purposive sampling
is a sampling technique that allows a researcher to use cases that
have required information with respect to the objectives of the
study.
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11. METHODOLOGY
ITEM DESCRIPTION
Sample Size •The sample size for this study will be 138 employees who will be
obtained by selecting two respondents from the 69 real estate
developers who will include the general manager and business
development manager
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Instrument • The study will use primary data.
•Primary data collection tool specifically a questionnaire.
Data Collection
Procedure
•use self introduction letter and personal networks
•Self administered data collection template
• Research assistants to be used
Data Processing
& Analysis
• Data will be sorted, edited, and entered in SPSS
• Analysis results to be presented by use of percentage,
descriptive and inferential statistics
• Use of percentages, mean, standard deviation, t-test, F-
statistics and p-value

12. Thank
You
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