The psychosocial component of an operational risk management model : risky business in Tanzania

Abstract

The utilisation of an operational risk management (ORM) model is one of the compulsory activities during mergers and acquisitions in the financial sector. However, the implementation of such a model is often not as effective as intended. A cause of this might be situated in human behaviour and the influence of cultural differences, especially during cross-border business. This study determined how Tanzanians perceive risk, and identified the psychosocial components that affected the implementation of an ORM model in a target organisation in Tanzania. This resulted in the development of a conceptual framework, which integrated these psychosocial components into a theoretical psychosocial model of OR management. This qualitative study was situated within the hermeneutic phenomenology research paradigm. During the research, 35 semi-structured in-depth interviews were conducted, providing rich data. Participants were selected by means of criterion sampling. Most of the interviews sessions were conducted with one participant present. However, some of the interview sessions involved two or three participants resulting in a total of 46 participants being interviewed. Data were analysed using the hermeneutic circle, and incorporated content analysis. The findings of the study are of value to both the fields of psychology (social and organisational psychology) and OR management. Engaging in cross-border business is in itself a ‘risky’ business. Identifying the psychosocial components and incorporating them into ORM models, enables organisations to implement their ORM models more effectively (Renn, 2008). The theoretical model developed as a result of this research enables industrial and organisational psychologists and OR managers to manage growth initiatives, such as cross-border mergers and acquisitions in the financial industry, more accurately. Industrial and organisational psychologists and risk managers will consequently understand better how psychosocial components shape people and this will enable them to adapt their management approach accordingly.