This research has as the main purpose the identification of the relationships between eight KM variables and two RM variables, referring to the concepts of risk control and ERM implementation. The identification of these relationships is organised, as indicated in Chapter Three, through the selection of the items and variables and based on the performed literature review. The purpose of using these different items and variables is to study the relationships describing people, processes and technological aspects.
The research has a positivist approach that provides the possibility of building a relationship model, formulating hypotheses and testing them statistically (Babbie, 1998).
The positivism approach (Delanty, 2002) considers as fundamental the methods used in natural sciences and the purpose of science as the study of the reality which exists outside of the observer values and the possibility of studying it objectively. The positivist approach is based on observation and on the formulation of hypotheses to be validated.
These hypotheses were formulated in terms of the level of association among variables and the results can be used to test new hypotheses or to generalize results; equally, the analysis can include qualitative and quantitative components for clarification of concepts and relationships (Babbie, 1998; Miller, 2002). One of the aspects that is important in the positivism approach is that it allows for the creation of rigorous models to support the inference of the variables and their use in the improvement of risk control and ERM implementation (Guba and Lincoln, 1994).
To accomplish the research objectives this research uses quantitative methods and includes survey and statistical modelling to test the relationships.The survey is a useful method for answering questions about what, how much and how many, and allowing comparison among variables (Pinsonneault and Kraemer, 1993). Some additional points indicate that the survey was an appropriate tool for this research (Wimmer and Dominick, 1994):
The statistics regarding the responses provide the frequency of answers that allow for a quantitative analysis and statistical test of the hypotheses.
The closed-ended questions allow the comparison of the variables and the possibility of statistical analysis, independently and in combination.
The structure of the survey and the content of the questions are crucial for getting coverage of the subjects required in the research.
The number of questions and variables used is limited.
The codification for quantification is feasible through the survey which is complex in non-structured data gathering tools.
The respondent is not identified, and different criteria from different people of the organisation reduce the bias in agreement questions and answers.
The survey is a method that provides a quantitative description of the relevant variables;
the results might be extended to the population, the data obtained from the items provides the possibility of testing if the constructs used were reliable, in particular in this study where no previous studies have been performed; additionally, the survey provides gathering data that with statistical method provides objective evaluation of the relationships with the comparison of variables relationships in a bivariate way or in
multivariate way that is represents better the reality of variable interaction. Finally, the survey opens the opportunity to use these results in projecting them to the KM processes implementation and to provide bases for further studies in the field of KM applied to RM.
In this research, the survey was applied to a random sample of full-time employees in the Risk Management area in financial institutions. The survey uses the method of a questionnaire. The questionnaire is used for the hypothesis testing where the majority opinion about the issues and opportunities identified is important. There are different methodologies in applying a questionnaire. The application uses face to face questionnaires, mailed questionnaires, telephone questionnaires and web-based questionnaires. The pre-test of the questionnaire among people in the risk management field allows for identification of ambiguities and incorrect formulation of the questions. The pre-test consisted of preparing the items and questions and then testing them with people working in the risk management area. They suggested modification in wording related to the terms used for referring to web channel functionality, perceived value of ERM implementation, and the identification of item terms such as risk management intranet and interdepartmental and interdisciplinary work.
Given the population literacy in systems and the capacity to work individually, this research uses the following methods to perform a survey:
Face-to-face questionnaire: This method was used in the questionnaire testing step where the majority opinion was gathered with the respondent in front of the researcher, allowing specific closed questions regarding the subject.
Electronically web-based questionnaire: once the questionnaire was tested and the data gathered was reviewed an electronic web-based questionnaire was performed (Aaker and Day, 1990). These authors pointed out: “since each of the basic methods of data collection has different strengths and weaknesses, it is sometimes desirable to combine them and retain the best features of each while minimizing the limitations.”
This method has the following advantages (McDaniel and Gates, 2006): Rapid deployment, real time reporting, reduced costs, high response rate, and data
is input directly to a database in order to use it in the analysis step. The follow-up was the key for improving the answer rate in this method based on the main benefit, for the respondent, that the questionnaire is available any time on the web (Saunders et al., 2003).This is the desired design; however, this is the method with more weaknesses with regard to internet security, potential unrestricted access and the possible poor representation of the population because of internet access and computer literacy. The weaknesses were reduced given the application to the risk management association members.
The sampling was based on the assumption of randomness, unknown population size and a specific period of time for gathering the data (Johnson and Onwuegbuzie, 2004).
The selection of the sample is based on two steps: First, RM employees of bank headquarters (risk management is an activity with centralized operation) were contacted and those who accepted the interview were visited to gather the data.
The second step was through an email invitation to participate in the survey to risk management association members who worked for financial institutions. This invitation was directly using the email address that was provided by the member to the association.
The association portal provides capabilities to filter the organisation subsectors and regions in order to target financial institutions offering services of banking and insurance (see Financial Institution definition in Section 1.1) and mainly in North America. The selection is not probabilistic but the participation is at random.
The sample selection method was appropriate because those involved in activities in the field of RM in financial institutions represent a homogeneous population, given the type of organisation, the activities that they perform, problems that they are required to solve and roles that are the basis of the RM group in financial institutions. The application of the questionnaire using face-to-face and online methods was an appropriate choice of methods for the respondents to have access to the data-gathering instrument.
Additionally, these methods allow for gathering enough data in order to find relationships between the variables using statistical tools. This is crucial because many of the relationships among variables are not possible to perceive just in a descriptive review, but require the use of multivariate techniques (Wimmer and Dominick, 1994).
The identification of the variables and items describing these variables (see Chapter 3) was based on the concepts exposed in Chapter 2, in order to provide the control of the research. This means the variable control and the inclusion of the predefined items of the variables helped to maintain the focus of the research (Frankfort-Nachmias and Nachmias, 1992) and to reduce subjectivity (Balsley, 1970).
In summary, the development of the research, assuming a positivism approach, comprises a quantitative analysis of the variables and a statistical validation of the hypotheses in order to identify the bases for the KM and RM relationships.