Abstract:
This study set out to investigate the effect of operational risk management on the performance of commercial real estate
entrepreneurial investments in Kenya. The study adopted a descriptive survey design having a quantitative approach.
The target population was 9,320 real estate entrepreneurs comprising 884 sourced from SoftKenya directory, 95 from
the Kenya Developers Association, 320 from the Estate Agent Registration Board and 8,021 from National Construction
Authority having their registered offices in Nairobi, Nakuru, Kisumu and Eldoret. A sample size of 384 participants was
selected using a stratified random sampling procedure. Data was collected using an online questionnaire emailed to
respondents. The collected data was analysed descriptively and inferentially using frequency distribution – mean and
standard deviation, Chi-square, Pearson’s Correlation and multiple linear regression analysis with the aid of the
Statistical Package for Social Sciences (SPSS), version 20.0. The significance of each risk factor was examined using
Risk Significant Index method. From the study findings, operational risks were found to be relatively low in severity
compared to technical, financial and environmental risks in the commercial real estate sector in Kenya. The level of
management effort in mitigating sources of operational risk was also low. Management of operational risk coefficient
attained a statistical significance, which leads to the conclusion that operational risk management affects the
performance of commercial real estate entrepreneurial investments in Kenya. With more than 60% of the staff in the
sector having low knowledge of risk management, bridging the skill and knowledge gap is critical for better risk
management outcomes for the sector. This responsibility should be shared between the government and the real estate
entrepreneurs. The government should create forums or curriculum where risk management practice and concepts are
trained.
