Contingency Factor, Risk Management and Organization Performance: A Case of Pakistani Business Organization
Iqra University, Islamabad, Pakistan
This study examines the relationship among the perceived business risk and perceived organization performance. In this article, researcher has explored the role of risk management in dynamic business environment. This study employed the structural equation modeling method in order to test hypothesis. Questionnaire was used to collect data from senior finance professionals from organizations operating in Pakistan.The results indicate that contingency variable is significantly influences the organization performance. Regarding the effects of risk management variables, the results show that the magnitude of RM methods, formalization of RM methods and internal controls also have significant effects on the organization performance. Providing significance evidence on the contingent factor and risk management, the analysis helps managers to improve their organizational performance.This research highlights the magnitude of RM methods merely subject to how accurately managers perceive business risk. An overlooked risk not only affects the investment / finance / operational decisions but also reduces the overall organization productivity.Therefore, implementation of formalized RM methods, risk-based controls and magnitude of RM methods are necessary to maintain organization performance. This study contributes to the literature related to perceived business risk in Pakistani context. The researcher creates awareness among the managers about uncertainty / risk faced by companies and help them to develop appropriate internal controls to sustain organization performance.
Keywords: Perceived business risk, Maganitude of RM Methods, Formalization of RM Methods, Perceived Organization Performance